Washington Moves Weigh Down HK Stocks

Hong Kong stocks sank on Thursday as traders grow increasingly worried about the impact on the city's future from a US decision to revoke its preferential status, in response to China's plans for a new security law in the city.

The Hang Seng Index fell 0.7 percent, to 23,132.

HSI struggled to maintain early gains and fell in the afternoon as investors fret over the US move that could see the city lose key privileges, bringing into doubt its future as a global financial hub.

"The pace of deterioration in US-China relations will now depend on what sanctions, if any, President Trump puts on either China or Hong Kong," said Oanda's Jeffrey Halley.

"Financial markets, though, clearly believe that the post-Covid-19 reopenings, and vaccine progress story is the bigger one. There is also a sense of disbelief, that both sides would enact another trade war in the current circumstances."

And Stephen Innes at AxiCorp added: "The incomprehensibly-large global stimulus will continue to bolster risk sentiment as the market attempts to compartmentalise trade war risk from the reopening narrative."

However, David Kelly of JP Morgan Asset Management said many concerns remain.

"Eventually we will see a recovery but to be honest I think analysts are still way too optimistic about corporate profits," he told Bloomberg TV.

"We are in for a much deeper profit slide than investors are expecting and that does make the stock market somewhat vulnerable."

On the mainland, the Shanghai Composite Index rose 0.3 percent, to 2,846, but the Shenzhen Composite Index shed 0.3 percent, to 1,769.

Optimism over the reopening of major economies across the planet helped push most other Asian markets higher.

Tokyo rose more than 2 percent to a three-month high, while Sydney, Mumbai and Jakarta were up more than 1 percent.

Manila ended 0.8 percent up and Singapore was flat. (AFP)