Hang Seng corrects amid global sell-off

Finance | Agencies and Winnie Lee 29 Jan 2021

Hang Seng night futures recorded a modest rise after Hong Kong stocks fell over 700 points yesterday following a global sell-off in markets from east to west.

Hoever, Value Partners (0806) co-chairman and co-chief investment officer Cheah Cheng-hye and Invesco believed the decline in Hong Kong was only a correction.

The Hang Seng Index closed 746 points or 2.55 percent lower at 28,550 yesterday, and more than 1,600 points down from a 21-month peak of 30,159 points recorded on Monday. The mainboard turnover was HK$269.88 billion with a net inflow from mainland China of HK$11.33 billion. Net capital inflows through the Stock Connect decreased by 50 percent compared to Wednesday.

Analysts said there would be a support level at 28,000.

Among blue-chips, Tencent (0700) fell 2.92 percent to HK$681, Hong Kong Exchanges and Clearing (0388) fell 3.06 percent to HK$493, Meituan (3690) was down 2.31 percent at HK$355.6 and AIA (1299) 4.66 percent lower at HK$95.10.

This came as the People's Bank of China drained a net 150 billion yuan (HK$180 billion) of funds yesterday using open-market operations, the largest such amount since October. That adds to its 178 billion yuan withdrawal from the past two days.

But Federal Reserve chair Jerome Powell made clear the US central bank was nowhere near exiting massive support for the economy during the ongoing coronavirus pandemic, as officials left their benchmark interest rate unchanged near zero and flagged a moderating US recovery.

Supported by equity-related demand, the Hong Kong dollar exchange rate continued to stay near the strong end of its trading band.

The safe-haven US dollar gained broadly, with its index up at 90.753 from a January low of 89.206. The bounce in the greenback kept gold prices soft around US$1,836 (HK$14,320.8) an ounce.

A "sense of complacency" is permeating markets as investors, betting on continued accommodative monetary policy, are stretching asset prices, risking a sudden market correction, the International Monetary Fund warned on Wednesday.

Meanwhie, the United States also updated its ban on investments in certain Chinese military companies by delaying until May the application of the directive's restrictions on companies with names similar to those that have been blacklisted. The Biden administration said most investments in companies "whose name closely matches, but does not exactly match, the name of a Communist Chinese military company" would be allowed until May 27, extending the deadline which was originally set to January 28.

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