HK investors brace for Black Monday in wake of Wall Street bloodbath

Staff reporter and agencies

Hong Kong stocks are expected to fall by as much as 6 percent in the short run when trading resumes today after the extended weekend, in the wake of a bloody sell-off in the United States amid an escalating global trade war.

The benchmark Hang Seng Index could drop to as low as 21,500, 5.9 percent below last Thursday's close of 22,849, back to a level seen in mid-February of the year, warned Kenny Ng Lai-yin, securities strategist at Everbright Securities International.

Dickie Wong, executive director of research at Kingston Financial Group, delivered a less pessimistic projection that the indicator may fall to the 22,000 mark.

Both Ng and Wong estimate investors will continue to rush to safe-haven assets like gold, yen and US Treasuries.

Ng expects gold could climb further to as high as US$3,300 (HK$25,740) per ounce, as the investor interest in stocks weaken amid the tariff shock and concerns over inflation.

The precious metal has hit record highs multiple times this year, and closed at US$3,037.65 on Friday.

The warnings come after the S&P 500 closed 6 percent lower on Friday, its worst day since March 2020, with US$5.4 trillion in market value evaporated.

The Nasdaq 100 plunged 6.1 percent, entering a bear market. The swiftness of the gauge's 20 percent drop from its February peak is rivaled only by the pandemic meltdown in 2020 and 2000's dot-com implosion.

The trigger was the steepest American tariffs in a century announced by US President Donald Trump - a 10 percent tariff on all exports to America, with even higher duties on some 60 nations - and the countermeasures by some countries including China's 34 percent tariff on all American imports starting April 10, in addition to targeted actions against poultry producers and weapons makers

Mainland investors too are set for a grim Monday as a gauge of Chinese stocks listed in the United States plunged 8.9 percent on Friday, the most since October 2022.

However, even if the HSI falls to 21,500 at the close, the indicator would be still 7 percent higher than the same day last year, after jumping as high as 24 percent to 24,874 points on March 19.

The gains, which were partly supported by the influx of mainland investors over the past weeks, are likely to be maintained as the valuations of Hong Kong-traded equities are still relatively low compared with those in the United States, Ng said.

In other news, Taiwan's top financial regulator said on Sunday it will impose temporary curbs on short-selling of shares to help deal with potential market turmoil.