Hong Kong shares continued to move lower on Friday with the fifth successive daily Hang Seng retreat and sharpest weekly decline for close to three months as confidence deteriorated further.
US equity markets were unable to make any significant impression on Thursday with marginal losses in the S&P 500 index and weakness in Asian markets. Oil prices were subjected to choppy trading conditions with slight net losses.
There were further concerns surrounding the Chinese economic outlook with fears that stronger data in March and April would not be sustainable. Sharp declines in mainland Chinese equity markets also had an important impact in undermining Hong Kong confidence.
Hong Kong retail sales data, released after Thursday’s market close was weaker than expected with a 9.8% annual decline in the year to March, the 13h successive decline with domestic demand subdued and weakness in international arrivals. There were some hopes that a weaker yuan in trade-weighted terms and recent dollar losses would help improve competitiveness and cushion the retail sector from further selling pressure.
After opening significantly lower the Hang Seng index moved steadily weaker during the morning session with lows close to 20,150 ahead of the break. Buyers were unable to make any impression during the afternoon session and there was fresh selling late in the session. The index closed with a loss of 339.95 points and 1.66% at 20109.87, the weakest close since the second week of March.
There were daily losses of over 2.00% for the finance and property sectors and the utilities sector also edged slightly lower despite gaining defensive support. HSBC and AIA dipped significantly lower during the day. The China Enterprises index fell 1.80% for the day, also the fifth successive retreat.
Friday’s US employment data will be important for global markets with a particular focus on the dollar, which will influence regional markets next week. China’s trade and international reserves data is scheduled over the weekend, which will have an important impact on confidence surrounding the Chinese economy and equity markets with any decline in exports undermining sentiment.
