Hong Kong Stocks Enter Correction as Energy Firms, Insurers Fall

  • Hang Seng extends decline since September high to 10 percent
  • Chinese equity gauges are among biggest losers this month

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Hong Kong stocks fell, with the benchmark index entering a correction, as energy producers and financial companies retreated amid dwindling turnover.

The Hang Seng Index slid 0.8 percent at the close. The gauge has slumped more than 10 percent since its Sept. 9 high as rising funding costs in Hong Kong and the mainland weighed on property developers and a weakening yuan turned investors off Chinese assets. The value of shares traded on the city’s stock market dropped to a four-month low on Wednesday before the start of holidays at the end of the week. The Shanghai Composite Index rose 0.1 percent.

"The selloff today reflects investors’ lack of confidence in the short-term performance of the China stock market," said Kenny Wen, a wealth management strategist at Sun Hung Kai Financial Ltd. in Hong Kong. "Volume is thin, not just due to the holiday season, but also because investors think there will be further downside in Hong Kong stocks and they are choosing to stay on the sidelines."

Chinese equity gauges are among the world’s biggest losers this month as surging money-market rates sparked turmoil in the nation’s bond market, while the weakening currency increased pressure on capital outflows. That’s capping a dismal year for mainland stock investors, with the Shanghai benchmark set for its biggest annual decline since 2011.

  • The Hang Seng Index has declined 5.1% in December and lost 7.1% in the fourth quarter, while it’s down 1.3% this year
  • China Shenhua Energy Co. fell 3.1%, the most on Hong Kong’s benchmark on Thursday. Cnooc Ltd. and PetroChina Co. dropped at least 2.1% as the oil industry faces an inventory overhang
  • China Life Insurance Co. retreated 1.7% in Hong Kong to lead a group of financial companies lower. Industrial & Commercial Bank of China Ltd. slipped 1.5% to its lowest price in a month
  • Shanghai’s benchmark gauge has fallen 3.4% in December, paring its gains for the quarter to 4.5%. The index is down more than 11% in 2016, set for its biggest loss in five years
  • Qingdao Huijintong Power Equipment Co. rose 44% in its trading debut in Shanghai
  • The Shanghai Composite will climb to 3,800 by the end of next year, according to the median forecast in a Bloomberg poll of 12 strategists and fund managers, implying a 21% gain from Wednesday’s close
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