Local Stocks Struggle Over Fresh Covid Curbs

Hong Kong stocks finished the morning session in the red following a weak lead from Wall Street and as the city sees a spike in virus infections that have forced leaders to reimpose containment measures.

The Hang Seng Index fell 0.61 percent, or 161 points, to 26,344.

Mainland shares also extended declines on Tuesday, dragged down by financial and transport firms, as Sino-US tensions continued to weigh on the market.

The CSI300 index fell 0.3 percent to 5,006 by the end of the morning session, while the Shanghai Composite Index lost 0.3 percent to 3,407.

Among sectors, the CSI300 financials index and transport index shed 0.7 percent and 0.9 percent.

The US on Monday imposed financial sanctions and a travel ban on 14 Chinese officials over their alleged role in Beijing's disqualification last month of elected opposition legislators in Hong Kong. Meanwhile, Foreign Minister Wang Yi assured American executives during a videoconference on Sunday that Beijing remained committed to the Phase 1 trade deal with Washington, the head of the US-China Business Council said.

Some market participants expected limited impact from Sino-US tensions on the A-share market.

"The impact from the Sino-US relations (on the market) could decrease as the post-Trump era nears," said Hu Yunlong, chief investment officer at Beijing Kaixing Asset Management Co.

Hu said the recent retreat was mainly due to a "year-end effect", where investors turn more cautious and book profits, while there are still worries over the coronavirus outbreak abroad.

The market could continue to be range-bound as the year-end approaches when the liquidity conditions become relatively tight, Wanlian Securities said in a note. (AFP/Reuters)