Trade war fallout deepens

Business | Tereza Cai and Reuters 13 Sep 2018

Some investment experts are forecasting that the Hang Seng Index could fall to 25,000, dragged down by the impact of a trade war that could last for three years.

And Secretary for Commerce and Economic Development Edward Yau Tang-wah sees 7 percent of Hong Kong's exports being affected.

"We are the most open, free economy in the world - and also we live on trade," he said. "Hong Kong will be the first to suffer because of our vulnerability."

But Yau said the GDP growth forecast of 3-4 percent for 2018 was "still manageable." However, "the spillover effects could be huge."

Yesterday saw the HSI fall again to a close at 26,345 - 77 points down on Tuesday - with pharmaceutical shares declining the most. That was attributed in part to the Chinese government shaping to keep medicine price in check.

Sino Biopharmaceutical (1177) slumped 14.3 percent to a seven-month low of HK$7.50 and CSPC Pharmaceutical Group (1093) fell 9.73 percent to HK$16.7, a six-month low.

Shares of the blue-chip WH Group (0288) fell 1.85 percent to HK$5.32 due to the African swine fever.

Elsewhere on the board, index heavyweight Tencent Holdings (0700) rebounded 0.13 percent to HK$308. And shares of Anta Sports Products (2020) fell as much as 9.15 percent to HK$33.25 - the lowest price this year - after the company confirmed its bid for Finnish sports equipment maker Amer Sports.

As for the Macau gaming industry, Jonathan Galligan, CLSA's head of Asia gaming and conglomerates, said the premium mass is becoming more competitive with more overnight stayers while the VIP sector on its own has seen slower growth due to the depreciation of the yuan and the mainland economy slowing.

He added that the lower ratings being applied to Macau's gaming stocks has been overdone as balance sheets and cash flows are promising overall.

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