New tariffs threat trounces HSI

Top News | Jimmy Ding and Janice Huang 12 Jul 2018

The Hang Seng Index fell 370 points, or 1.29 percent, to 28,311 on the latest tariffs threat on Chinese goods although Xiaomi surged as much as 4.2 percent.

Almost all the blue chips dropped. Tencent fell 1.91 percent to HK$379.40, losing its HK$380 gate. AAC Technologies Holdings dropped 0.85 percent to HK$105 per share while HSBC Holdings dropped 1.29 percent.

Financial stocks were also in the red.

Shares of Ping An Insurance slid 0.98 percent despite two big deals the company announced yesterday.

It plans to purchase a 19.7 percent stake in property developer China Fortune Land Development, and people familiar with the matter said the company is in talks with other investors about a potential joint bid for Beijing-based plasma treatment provider, China Biologic Products Holdings.

China Eastern Airlines once slumped as much as 3.73 percent amid an announcement of a private share placement.

The state-owned airline proposes to sell as many as 1.62 billion shares in the mainland to investors including the Juneyao Group, collecting 11.8 billion yuan (HK$13.88 billion) and a further placement of up to HK$3.55 billion of stock in Hong Kong, according to a filing to the Shanghai stock exchange on Tuesday.

Proceeds from the sale will be used to finance the purchase of 18 planes worth US$1.5 billion (HK$11.7 billion), including narrow-body jets such as Boeing 737s and Airbus A320s and wide-body jets such as the 787 Dreamliners and A350s, according to the filing.

Looking ahead, DBS Hong Kong said the Hang Seng Index will find support at 27,800.

"The market cannot rally in short term as volatility will increase for the next half year, but a full scale trade war is unlikely to happen," said Hou Wey Fook, chief investment officer of consumer banking and wealth management of the bank.

Meanwhile, Pictet believed defensive stocks such as utilities are no longer defensive since the leverage of utility companies is high.

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