Market dives amid street battles

Top News | Kevin Xu 13 Jun 2019

The Hang Seng Index dived 480.88 points to 27,308.46 amid fears over social stability sparked by the anti-fugitive law amendment street battles.

Developers tumbled after Goldin Financial (0530) forfeited the HK$25 million deposit for a commercial plot at Kai Tak that it won by tender last month. New World Development (0017) fell 4.75 percent to close at HK$11.64, Sino Land (0083) 3.05 percent to HK$12.70 and Henderson Land (0012) 2.41 percent.

Ample Capital director Alex Wong Kwok-ying said rising rates also took its toll on developers and banks. The one-month interbank borrowing cost rose 29 basis points to 2.42286 percent, the highest since 2008. The Hong Kong dollar strengthened as much as 0.26 percent, the largest gain in seven months.

Mobile phone gear makers also suffered, with Sunny Optical Technology (2382) slumping 6.05 percent to HK$69.15, making it the biggest loser among blue chips. AAC Technologies (2018) fell 3.44 percent to HK$42.10, after US Commerce Secretary Wilbur Ross said Tuesday presidents Xi Jinping and Donald Trump will not strike a "definitive deal" to end the trade war at the upcoming G20 meeting.

Said Wong: "We were down a little bit more than normal as we had a very strong but short recovery over the past two trading sessions. Relatively, we were on very much higher ground." The HSI rose above 27,000 this week, hitting a four-week high, 27,857, on Tuesday intraday.

Wong does not expect a rebound in the absence of a dramatic improvement in political developments.

"We probably would still have some downside of another 3 to 5 percent to be in place," he said.

But he added that now is a good opportunity to invest in local developers and insurers as their "fundamentals in the long term may not be too bad as they are very well managed and low financial leveraged."

The Shanghai Stock Exchange Composite Index slipped 0.56 percent at 2,909.38 and its Shenzhen counterpart closed 0.92 percent lower at 8,954.71.

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