HONG KONG /SHANGHAI: China stocks closed at seven-month lows on Wednesday, while Hong Kong shares dropped more than 1%, tracking declines in Asian markets as a sharp tech sell-off on Wall Street overnight and a slump in oil prices hit sentiment.
Risk appetite was also curbed by China’s slowdown in services sector activities and elevated trade frictions between China and Canada.
China’s blue-chip CSI 300 ended down 0.7% at its lowest level since early February. The Shanghai Composite Index dipped 0.7%. Hong Kong’s benchmark Hang Seng Index lost 1.1%.
Tech shares fell in both markets, after shares of artificial intelligence heavyweight Nvidia tumbled 9.5% overnight. US stock benchmarks registered their biggest daily drop since early August.
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“Hong Kong is pretty weak, so whenever we see a negative signal like that from the US, Hong Kong will be performing even worse,” said Steven Leung, executive director – institutional sales, UOB Kay Hian.
Leung said unlike the correction in August, which was affected by the unwinding of the yen carry trade, the main driver of the market weakness this time was concerns over the strength of the US economy.
“It’s more scary, because it’s not a technical reason, it’s a more fundamental issue.”
Investors are also fretting over the Chinese economy, after a private survey showed growth in the services sector activity slowed in August despite the summer travel peak.
Energy shares in both Shanghai and Hong Kong led declines, as oil prices extended losses.
An index tracking Hong Kong-listed energy shares slumped 4.5%, while China’s CSI energy index dropped 2.2%.
Shares of oil giants CNOOC and PetroChina slumped more than 5% in both markets.
China’s CSI 5G Communication Index fell 1.5%, while Hong Kong’s tech index slipped 0.4%.
China’s start-up board ChiNext Composite index reversed gains from the morning session to end flat.
Source: Brecorder
