Hong Kong Stocks Pare Loss on Bets Policy Makers to Calm MarketsBloomberg News
China may make targeted moves to loosen policies, Xufunds says
Shenzhen Composite Index rises to highest level in two months
Hong Kong stocks pared declines amid signs that global policy makers are taking steps to limit the fallout from Britain’s vote to leave the European Union.
The Hang Seng Index fell 0.3 percent, trimming a loss of as much as 1.6 percent that sent the gauge toward its lowest level in a month. The Shanghai Composite Index closed 0.6 percent higher, emerging as the world’s best performer since the British referendum. The pound and Europe’s benchmark equity gauge both rebounded after tumbling 11 percent in the last two trading sessions, while the Bloomberg Commodity Index climbed from a three-week low.
Stocks in Hong Kong narrowed losses before EU leaders gather in Brussels on Tuesday for the start of a two-day European Council summit to discuss Britain’s decision to leave the bloc, while Bank of England Governor Mark Carney is scheduled to chair a meeting of financial stability officials. The U.K.’s referendum to exit the EU has roiled global markets, wiping out almost $4 trillion from the value of equities amid concern the nation’s departure will disrupt the already-fragile global economic recovery.
“There are strong market expectations that governments around the world will take measures to stabilize the market after Brexit, with the European Central Bank likely to adopt quantitative easing,” said Wang Chen, a partner with Xufunds Investment Management Co. in Shanghai. “China may also make targeted loosening policies. The first wave of the repercussions of Brexit should come to an end.”
The Hang Seng Index dropped to 20,172.46 at the close, while the Hang Seng China Enterprises Index of mainland companies in Hong Kong lost 0.4 percent. The Shanghai Composite rose to 2,912.56, taking its gain since trading began on Friday to 0.7 percent, the most among global equity benchmarks tracked by Bloomberg.
HSBC Holdings Plc, the London-based lender with the second-highest weighting on the Hang Seng Index, slipped 0.6 percent at the close after falling as much as 2.9 percent. Standard Chartered Plc fell 2.1 percent for its steepest three-day loss since 2012. CK Hutchison Holdings Ltd., which generated 37 percent of its total earnings before interest and taxes from the U.K. last year, dropped 1.8 percent.
The Shenzhen Composite Index climbed 1.2 percent to its highest level since April 15. The ChiNext index, the benchmark for a venue of smaller companies that are off-limits to most foreign investors, rose 1.1 percent. The gauge had jumped 3 percent on Monday amid speculation authorities will soon announce details of a long-awaited exchange link with Hong Kong. Trading volumes on the Shenzhen Stock Exchange were 27 percent higher than the 30-day average Tuesday.
“Some funds are betting that the Shenzhen-Hong Kong link will be announced before July 1,” said Wei Wei, an analyst at Huaxi Securities Co. in Shanghai. “It’s a speculative opportunity.”
Shenzhen’s Small and Medium Enterprise Board, a 12-year-old market for mostly non-state companies, is emerging as the new leader for trading in Chinese equities. The board, which first climbed to the top of turnover rankings for the nation’s four major trading venues on May 17, has since jockeyed for the position with the Shanghai Stock Exchange, with both bourses handing about 180 billion yuan ($27.1 billion) of trades on average over the past five days.
— With assistance by Shidong Zhang