Hong Kong shares slumped on Wednesday, dragged down by weakness in Chinese insurers and property developers, with turnover low as investors became more averse to riskier assets on fears of contagion from Europe’s festering debt crisis.
The Hang Seng Index closed down 2 percent at 18,960.9 [US$2436.09]. The China Enterprises Index of top mainland companies listed in Hong Kong ended down 2.87 percent at 10,332.09 [US$1327.06].
The Shanghai Composite Index slumped to its worst daily loss in almost two months, finishing down 2.48 percent at 2,466.96 [US$316.95], with financials hard hit after the International Monetary Fund warned that China’s biggest commercial banks faced systemic risks.
HSBC Holdings Plc was the top drag, sinking 2.1 percent to the lowest in about a month at HK$60.75 [US$7.805]. The Hong Kong listing of Europe’s largest bank is now down almost 24 percent in the year to date, but some traders suggest the stock could challenge the HK$60 [US$7.078] level, which served as support in September. If that level is broken, they said the stock could then test its Oct. 4 low at HK$56.65 [US$7.278], pressuring the Hang Seng Index where it has a 15 percent weighting.
Wednesday’s loss snuffed out the recovery from Nov. 10’s more than 1,000-point slump, with investors fearing a worsening of Europe’s debt problems as the cost of government borrowing in the region rose, heightening concern over a contagion. Near-term support is seen at about 18,700 points, the 38.2 percent Fibonacci retracement of its rise from Oct. 4 to its Oct. 28 peak.
China Life Insurance Co Ltd was among the top percentage losers on the Hang Seng Index, dropping 5.1 percent after posting premium growth for October that slowed more than expected. Peers Ping An Insurance (Group) Co of China Ltd and China Pacific Insurance (Group) Co Ltd slumped 5.9 and 6.9 percent, respectively.
(Reporting by Clement Tan; Editing by Chris Lewis)
Was this article valuable?
Here are more articles you may enjoy.