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Brendan Clift

Hong Kong stocks closed sharply lower on the first trading day of the Year of Monkey on Thursday, posting the worst loss to start a lunar new year since 1994, as traders fled equities for safe-haven assets over fears on declining oil prices, capital outflows from China, and dim economic outlook.
The Hang Seng Index sank 3.9 per cent or 742.37 points to close at 18,545.80. The Hang Seng China Enterprises index, or the H-shares index, finished off 4.9 per cent or 396.95 points at 7,657.92.
“It is not a surprise to see the stock market fell as the regional and global stock markets have been down during the Lunar New Year,” said Chow Chung Kong, chairman of Hong Kong Exchanges and Clearing.
Chow said investors were worried about declining commodity prices, capital outflows spurred by currency fluctuations, and the impact of China’s economic slowdown on the world economy.
“Growth is continuing its structural slowdown and weak property investment, industrial overcapacity, and labour market stresses will continue to exert downward pressure on the economy ...”
Alex Wolf, an economist for emerging markets at Standard Life Investments, also cautioned Thursday that it may be hard for China to reach its 2016 growth target range of 6.5 per cent to 7 per cent, as it faces serious challenges including sluggish property market, overcrowded industrial sector and weak labour market.
“But even with the added flexibility, we believe it will be difficult (for China) to hit the lower end of the target band,” Wolf said, “Growth is continuing its structural slowdown and weak property investment, industrial overcapacity, and labour market stresses will continue to exert downward pressure on the economy.”

He also predicted that China could see continued capital outflows in the next couple of months.
Among market shakers in Hong Kong, Sino-British banking giant HSBC Holdings slid 5.4 per cent to HK$49.5, after Morgan Stanley downgraded its rating of the stock to Underweight from Equal-Weight. China Mobile, another index heavyweight, declined 3.1 per cent to HK$82.
READ MORE: Shenzhen-Hong Kong stock connect set to be delayed for longer due to market volatility
Oil shares also suffered heavily, after crude prices slumped in recent sessions over worries about supply glut and sluggish demand. Refiner Sinopec plunged 6.4 per cent to HK$4.1, offshore oil producer Cnooc tumbled 5.3 per cent to HK$7.45, and state-owned energy giant PetroChina fell 5.1 per cent to HK$4.47.
Crude futures dropped further in Asian trade on Thursday. March WTI crude fell 2.6 per cent to US$26.76 a barrel in the Globex electronic session, after settling below US$28 a barrel in the prior session. April Brent crude traded 1.3 per cent lower at US$30.44.
However, shares of gold miners bucked the weak trend and rose sharply, after gold prices spiked during the Lunar New Year break as investors rushed into safer assets amid increased volatility in global equity markets. Zijin Mining surged 8.1 per cent to HK$2.13. Zhaojin Mining soared 10 per cent to HK$5.08.
“If the China market opens higher that could help to control sentiment in the Hong Kong market. The Hong Kong market has already dropped to quite an attractive level ...”
April gold advanced 1.2 per cent to US$1,218.90 per ounce in Asian trade on Thursday.
Meantime, shares of Tianjin Port Development fell 3.8 per cent to HK1.01, after the company announced that China’s State Council has suggested the company’s chairwoman Zhang Lili should be dismissed from her position following an investigation into the Tianjin warehouse blast. The company said in an exchange filing that it became aware of the development via a report posted on the official website of China’s top work safety authority, but has not been notified about the impact of the suggestion of Zhang’s employment.

China markets are scheduled to resume trading on Monday. Kenny Tang, chief executive officer of Junyang Securities, said he expected to see an injection of positive sentiment ahead of anticipated stimulus announcements next month.
“If the China market opens higher that could help to control sentiment in the Hong Kong market. The Hong Kong market has already dropped to quite an attractive level,” Tang said.
Elsewhere in the region, South Korea’s Kospi Composite dropped 2.9 per cent to end at 1,861.54, and India’s Sensex index fell 2.6 per cent to trade at 23,134.31 in afternoon trade. Australia’s S&P/ASX 200 rebounded 1 per cent to close at 4,821.10 after falling to a bear market in the previous session. Japanese markets were closed on Thursday for a public holiday.


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Hong Kong Stock Exchange

Hong Kong stocks suffer worst Chinese New Year debut since 1994

No Caption Available.

A display board shows the falling Hang Seng Index during morning trading on the first day of trading after Lunar New Year holidays at the Hong Kong Stocks Exchange in Hong Kong, China February 11, 2016. REUTERS/Bobby Yip

epa05153559 A woman looks at an electronic billboard displaying the Hang Seng Index numbers in Hong Kong, China, 11 February 2016. The Hang Seng Index slumped 3.8 percent in the morning as markets reopened following a three-day trading break, headed for their worst start to a lunar new year since 1994 . EPA/JEROME FAVRE

A trader reacts to changes in the markets as he works on the trading floor of the stock exchange in Hong Kong. Photo: AFP

Shenzhen-Hong Kong stock connect set to be delayed for longer due to market volatility

Traders work on the trading floor of the Hong Kong Stock Exchange, operated by Hong Kong Exchanges and Clearing Ltd. (HKEx), during the first day of trading after lunar new year in Hong Kong, China, on Thursday, Feb. 11, 2016. Hong Kong stocks headed for their worst start to a lunar new year since 1994 as a global equity rout deepened amid concern over the strength of the world economy. Photographer: Xaume Olleros/Bloomberg ORG XMIT: 604503659

HKEx chief executive Charles Li (left) congratulates a floor trader who received red packets yesterday as HKEx chairman Chow Chung-kong (centre) looks on. Photo: Reuters

Hong Kong markets chaos as equity and currency swept up in selling onslaught 

A pedestrian walks past an electronic stock board displaying the closing figure of the Nikkei 225 Stock Average outside a securities firm in Tokyo, Japan, on Wednesday, Jan. 20, 2016. Japanese stocks plunged into a bear market amid a slump in equities across Asia as investor concerns over the global economic outlook outweighed technical signs that a China-fueled rout has gone too far. Photographer: Kiyoshi Ota/Bloomberg

Investors look at computer screens showing stock information at a brokerage house in Fuyang, Anhui province, January 19, 2016. China stocks rebounded roughly 3 percent on Tuesday, as weak quarterly economic data strengthened market expectations the government will unveil more stimulus moves. REUTERS/China Daily ATTENTION EDITORS - THIS PICTURE WAS PROVIDED BY A THIRD PARTY. THIS PICTURE IS DISTRIBUTED EXACTLY AS RECEIVED BY REUTERS, AS A SERVICE TO CLIENTS. CHINA OUT. NO COMMERCIAL OR EDITORIAL SALES IN CHINA.

An investor uses a computer terminal to check stock prices at a securities company in Beijing on January 20, 2016. Photo: AFP

Japan stock market rout shows no let-up by close as Singapore equities slide; Hong Kong poised to trade lower Thursday

A money trader works in front of the computer terminal at a foreign exchange brokerage in Tokyo, Tuesday, Feb. 9, 2016. Asian markets tumbled Tuesday as renewed jitters about the global economy set off a wave of selling in banking stocks. The dollar fell to 114.90 yen from 115.58 yen. (AP Photo/Shizuo Kambayashi)

A woman walks past an electronic stock board showing Japan's Nikkei 225 in Tokyo as Asian stock markets fell for a third consecutive day on Wednesday, beset by nerves about shaky global growth, falling oil prices and possible capital shortfalls at major European banks. Photo: AP

Hong Kong stock market likely to head lower on first trading day of Year of the Monkey 

A man walks by a bank electronic board showing the fall of Hong Kong's Hang Seng share index at Hong Kong Stock Exchange Wednesday, Feb. 3, 2016. Global shares stumbled Wednesday after another steep drop in the price of oil reinforced worries about the potential impact on the world economy of job cuts and reduced investment in the energy industry. (AP Photo/Vincent Yu)

HKEx Chief Executive Charles LI Xiaojia (left) and exchange Chairman Chow Chung-kong pose for the traditional Lunar New Year photo on Friday. Photo: SCMP Pictures

Update | Hong Kong stocks suffer worst Chinese New Year debut since 1994

First day of the Year of the Monkey brings ill fortune for investors