Hong Kong shares knocked by US election uncertainty; China dips

Hong Kong's benchmark Hang Seng index dropped 1.3 percent, to 22,837.88 points, while the Hong Kong China Enterprises Index lost 1.8 percent, to 9,528.68.

By: Reuters | Shanghai | Published:November 2, 2016 11:40 am
US Presidential elections, US Presidential elections 2016, US Elections 2016, Hong Kong, Hong Kong Shares, Hang Seng, Hong Kong China Enterprises, Donald Trump, Hilary Clinton, Shanghai, China, Trade, business, world market Hong Kong-traded shares of Standard Chartered plummeted to a two-week low after third-quarter results came below forecasts and the British lender confirmed a Hong Kong investigation. (Source: Reuters)

Hong Kong stocks joined a global selloff in riskier assets, with trading on Wednesday morning underscoring increasing nervousness over a tightening US presidential race. The mood was already grim as financial heavyweight Standard Chartered slumped following the lender’s confirmation of a Hong Kong investigation, and energy shares were sold off on lower oil prices.The bearish sentiment also spilled to China, counteracting optimism stemming from Tuesday’s upbeat manufacturing activity data, but the decline was more subdued due to the country’s tight capital controls.

Hong Kong’s benchmark Hang Seng index dropped 1.3 percent, to 22,837.88 points, while the Hong Kong China Enterprises Index lost 1.8 percent, to 9,528.68. Barring a sharp afternoon rebound, the indexes are on track to post their biggest one-day fall in at least three weeks. Global markets, which had priced in a much higher chance of a victory for Democratic candidate Hillary Clinton in the Nov. 8 presidential election, were roiled by signs that the race was tightening.

Friday’s news the Federal Bureau of Investigation had opened a fresh probe into Clinton’s use of private emails appeared to boost the election prospects of her Republican rival Donald Trump, who is seen as creating uncertainty given his pledge to tear up international trade deals and slap import tariffs.

“Investors are worried about a Trump victory and cutting their risk appetite,” said Alex Wong, Hong Kong-based director at Ample Finance Group, adding they don’t want be caught unprepared as they were after Britain voted to exit the European Union.Investors are also bracing for a possible U.S. rate hike in December but “that has been pretty much priced in,” he said.

All main sectors fell in Hong Kong, with financial and energy shares leading the decline. Hong Kong-traded shares of Standard Chartered plummeted to a two-week low after third-quarter results came below forecasts and the British lender confirmed a Hong Kong investigation. The bank said Hong Kong’s financial regulator planned to take action against it in relation to its role as a joint sponsor of an initial public offering in 2009.

In China, the CSI300 index fell 0.6 percent, to 3,340.12 points at the end of the morning session, while the Shanghai Composite Index lost 0.5 percent, to 3,107.23 points. Trading volume remained thin as lingering concerns over  China’s economic health kept investors at bay.