Hong Kong, China stocks tank as Beijing closes US consulate in Chengdu, the ‘last straw’ for spooked investors
- Shenzhen stocks plunge 5 per cent, while Hong Kong’s Hang Seng tumbles 2.2 per cent
- One analyst says bad US jobs news and China tightening trend makes consulate closing ‘last straw’ for worried traders
Hong Kong and mainland stocks tanked after Beijing ordered the US to close its consulate in Chengdu, a retaliatory move that added to escalating US-China tensions and became what one analyst called the “last straw” for spooked investors.
On the mainland, where stocks have been soaring of late, the sell-off on Friday was fierce.
The CSI 300 of large caps in Shanghai and Shenzhen plummeted 4.4 per cent, the Shanghai Composite Index fell 3.9 per cent, and the Shenzhen Composite Index fell 5 per cent. In Shenzhen, with more than 2,000 stocks on the benchmark, only 177 stocks posted any gains at the close. All three benchmarks posted their second consecutive week of losses due to Friday’s collapse.
Hong Kong’s Hang Seng Index fell 2.2 per cent, or nearly 560 points. That left it with its second straight week of losses. It lost 1.5 per cent this week -- with a 2.3 per cent slide on Wednesday on news that the US was shutting down China’s consulate in Houston, Texas -- on top of 2.5 per cent the previous week.
“All bad news all around,” said Alan Li, portfolio manager at Atta Capital. “Weekly US unemployment rose for the first time in four months. The second US stimulus package was delayed. [China’s central bank] tends to tighten liquidity in the second half. US and China tensions escalating is the last straw to the market.”
