Hong Kong Stocks Drop On Trade Talk Doubts

Hong Kong stocks turned negative on Tuesday after a recent rally as profit-takers moved in, while dealers were also spooked by a report saying China and the US were struggling to make progress on parts of their trade talks.

The Hang Seng Index sank 0.7 percent, to end at 27,005.

On the mainland, the Shanghai Composite Index lost 1.2 percent, to 2,579, while the Shenzhen Composite Index fell 1.2 percent, to 1,314.

Tokyo skidded 0.5 percent, along with Sydney while Singapore was 0.4 percent off and Seoul dropped 0.3 percent. Wellington, Mumbai and Manila were also well down.

While headlines regarding talks earlier this month were upbeat, and eyes turn to another meeting including China's top negotiator Liu He at the end of January. But the optimism was jolted by a Bloomberg News report that said the two sides were struggling to reach agreement on the crucial matter of intellectual property.

Also, Xinhua news agency reported that President Xi Jinping had told top provincial leaders the Communist party "is facing long-term and complex tests in terms of maintaining long-term rule, reform and opening-up". The comments suggest he is growing worried about the effects of slowing economic growth.

"Recent signs suggest that China is struggling to sustain economic momentum, and risks of a hard landing are rising. If China falls back to earth, we will all feel the tremor," economists at Northern Trust said in a note. (AFP)