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Monday, September 12, 2016, 16:39

HSI posts biggest one-day drop in 7 months

By Reuters

HONG KONG - Due to investors’ expectations of a US Fed rate hike happening soon, the Hong Kong benchmark index saw the biggest drop in a single day for seven months on Monday.

The Hong Kong benchmark Hang Seng Index (HSI) slumped 809.10 points or 3.36 percent to close at 23,290.6, with a turnover of HK$94.55 billion. Hang Seng China Enterprises Index decreased 403.89 points or 4.02 percent to 9,654.08, with a turnover of HK$22.38 billion.

Besides the Hong Kong stock market, other Asian stocks also fell. Japan’s Nikkei 225 was down 1.73 percent to 16,672.92 while the MSCI index for other shares across the region fell 1.22 percent to 140.34.

Market experts explained that the drop was due to investors’ expectation of a US Fed rate hike to happen in September and their worries about stock market regulations raised by the China Securities Regulatory Commission recently, as well as Moody’s calling the Hong Kong election results “credit negative”.

Hong Kong’s benchmark index opened down 503 points and tumbled 694 points at most to 23,405. It slumped 680 points or 2.8 percent to 23,419 at midday. The Hang Seng China Enterprises Index of mainland shares also dropped 371 points or 3.7 percent to 9,686. Market turnover amounted to HK$54.703 billion for half day.

On Friday, US Federal Reserve Bank of Boston President Eric Rosengren said in a speech that higher rates were needed to prevent the economy from overheating.

US stocks fell sharply on Friday as investors grew concerned about a rate hike, probably in September, after a growing number of Fed officials delivered hawkish comments.

The speech of Liu Shiyu, chairman of the China Securities Regulatory Commission, weighed on investors’ concerns over the market. Liu emphasized comprehensive regulation and monitoring of the stock market during the Seventh General Meeting of the Shanghai Stock Exchange.

Experts expect the worries will be digested by the market in the coming week as the Fed will have a meeting to discuss the rate hike issue next week.

Investment bank Goldman Sachs pointed out its preference for offshore Chinese stocks at present, expecting the stocks to continue increasing.

tingduan@chinadailyhk.com

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