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Hong Kong leads way again in fresh Asia market sell-off
HONG KONG, June 13, 2019 (BSS/AFP) – Asian markets fell again Thursday with
Hong Kong suffering a second straight day of heavy losses as investors fret
over the impact of protests in the city and plans to introduce a
controversial law allowing extradition to China.
Equities were once more deep in negative territory owing to uncertainty
over the China-US trade saga and following a tepid inflation report out of
Washington, while oil prices were wallowing at five-month lows on supply and
demand fears.
Hong Kong’s Hang Seng Index led losses after Wednesday’s demonstrations
against the planned extradition law, which many fear will entangle people in
China’s courts and hammer the city’s reputation as an international business
hub.
While the protests have subsided for now the market was down 1.6 percent
in the morning, extending the previous day’s 1.7 percent loss.
And with Beijing backing the law, observers warned the issue could have a
detrimental effect on the mainland.
“Beijing’s push for this extradition bill could prove costly as investors
and businesses value Hong Kong’s autonomy,” said OANDA senior market analyst
Edward Moya.
“Uncertainty with Hong Kong’s autonomy will dampen business prospects and
put a further strain on Chinese growth. If the US and Europe become involved
it could complicate relations and future trade deals.”
Hong Kong has also come under pressure from the international community,
with the European Union saying the proposed law had “potentially far-reaching
consequences for Hong Kong and its people, for EU and foreign citizens, as
well as for business confidence in Hong Kong”.
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– Crude struggles –
Other regional markets were also in the red, with recent optimism that the
Federal Reserve will cut interest rates soon — helped by the soft inflation
data — unable to soothe investor angst.
Tokyo ended the morning 0.8 percent lower, Shanghai and Singapore each
fell 0.6 percent, Sydney was 0.1 percent off and Taipei fell 0.5 percent.
Wellington and Manila were also lower.
Energy firms were among the worst hit after oil prices were hammered
around two percent Wednesday by data showing a surge on US inventories, which
exacerbated ongoing worries about the China-US trade war. Both main contracts
were down in early trade Thursday.
Sydney-listed Woodside Petroleum, Inpex in Tokyo and Hong Kong-traded
CNOOC all fell more than two percent.
The jump of more than two million barrels of crude — compared with an
expected drop of one million — fuelled worries about demand in the world’s
top economy and sent both main contracts to levels not seen since January.
“Trade policy uncertainty and floundering demand forecasts continue to
hang like an anvil around the market’s neck,” said Stephen Innes, managing
partner at Vanguard Markets.
“But amplifying the move is the counter-seasonal uptrend in crude stocks,
which is showing little signs of reversing.”
Hopes that OPEC and other key producers led by Russia will reach an
agreement to extend output cuts beyond June are giving limited support to
prices, although no date has been set for their meeting due later this month.
“While the group has still to settle on a date for their upcoming bi-
annual meeting, members continue to promote the idea of further cuts. UAE
said yesterday that the group is close to agreeing to extend cuts,” Moya
said.
– Key figures around 0300 GMT –
Tokyo – Nikkei 225: DOWN 0.8 percent at 20,958.25 (break)
Hong Kong – Hang Seng: DOWN 1.6 percent at 26,883.86
Shanghai – Composite: DOWN 0.6 percent at 2,829.11
Euro/dollar: UP at $1.1293 from $1.1288 at 2100 GMT
Pound/dollar: UP at $1.2695 from $1.2687
Dollar/yen: DOWN at 108.44 yen from 108.51 yen
Oil – West Texas Intermediate: DOWN 19 cents at $50.95 per barrel
Oil – Brent North Sea: DOWN eight cents at $59.89 per barrel
New York – Dow: DOWN 0.2 percent at 26,004.83 (close)
London – FTSE 100: DOWN 0.4 percent at 7,367.62 (close)
BSS/AFP/HR/0930