Saturday , December 15 2018
Breaking News
Home / International Markets / Hong Kong stocks suffer steepest monthly drop in two years
Hong Kong stocks suffer steepest monthly drop in two years

Hong Kong stocks suffer steepest monthly drop in two years

HONG KONG: Hong Kong’s stock market on Wednesday posted its steepest monthly loss in more than two years, as concern about the pace of potential U.S. interest-rate increases weighed on global investor sentiment.

The Hang Seng Index lost 6.4% during the month, the most since January 2016, with 41 of its 51 constituents in the red. Property developer Country Garden Holdings and mobile-services operator China Unicom (Hong Kong)were the worst performers in February, dropping 16.3% and 13.5%, respectively. Industrial & Commercial Bank of China (ICBC) shed 8.6%, and China Construction Bank (CCB) gave up 9.6% after a strong performance the previous month.

Apple suppliers Sunny Optical Technology Group and AAC Technologies Holdings rose 20.7% and 19.2%, respectively, the two best performers on the index, as shares of the iPhone maker also outperformed equity indexes in the U.S. during February.

In Wednesday’s trading, the Hang Seng Index fell 1.4% to 30,844.72. Shares of Country Garden, Sunny Optical, CCB and ICBC dropped 1.1%, 1.4%, 2.7% and 2% respectively, while Unicom gained 0.2% and AAC added 0.5%.

The Hang Seng Index’s weak monthly performance follows a nearly 10% jump in January. The decline came as global equities faced selling pressure in February amid worries that the U.S. Federal Reserve may raise interest rates at a faster pace than some investors had been expecting. The increased choppiness in stock moves during the month was likely to persist going into next month, some participants said.

“For March, I forecast that the Hang Seng Index will see large fluctuations, with a wide range of 30,000 to 33,000 points,” said Ivan Li, research director at DBS Vickers. While “the direction is not clear now,” more clarity is expected in the second half of March as more heavyweight companies release their earnings reports, he said.

One-off tax-relief measures announced by Hong Kong Financial Secretary Paul Chan on Wednesday did little to support the market. Chan proposed a reduction of up to HK$30,000 per case in taxes on company profits and salaries for the year ending March 31, a measure that will cost the government 25.5 billion Hong Kong dollars ($3.26 billion) and benefit more than 2 million taxpayers.

The Hang Seng China Enterprises Index of large mainland companies listed in the city fell 2.1% on Wednesday, taking its monthly loss to 9.1%.

In mainland trading, the Shanghai Composite Index dropped 1%, pushing its decline for the month to more than 6%.

Shares of market operator Hong Kong Exchanges & Clearing fell 2% amid the broad market declines. The company said during the midday trading break on Wednesday that its 2017 net profit climbed 28%, helped by higher trading, clearing and listing income.