The Hang Seng Index was down 0.77 per cent or 168.87 points to 21,851.88 on Monday morning session close.
Shares in Hong Kong and mainland China declined at the mi-day trading pause, following retreats in most Asian equity markets as rate increases announced last week by the US Federal Reserve and Hong Kong Monetary Authority lead to capital outflow back to American shores.
“With the higher rates in US,Hong Kong stocks could be under pressure as capital could flow out of Hong Kong ,” said Ben Kwong Man-bun, executive director of KGI Asia.
Insurers led losses among Chinese companies on the Hang Seng China Enterprises Index, amid concerns that mainland regulators will further place their market investments under scrutiny.
Ping An Insurance Group Co. fell 1.7 per cent to a four-month low of HK$39.75 while AIA Group Ltd fell 1.5 per cent to HK$43.75.
China Vanke Co. fell in Shenzhen and Hong Kong after the country’s largest property developer scrapped a white knight rescue plan involving Shenzhen Metro, which was intended to help defend it from a hostile takeover.
Vanke shares fell by as much as 6.3 per cent, closing 4.5 per cent lower at HK$18.48 during the lunch pause. In Shenzhen, Vanke’s shares fell as much as 5.3 per cent, dropping 4.7 per cent to 21.40 yuan.
The Shanghai Composite Index dropped 0.1 per cent to 3,119.65. The Shenzhen Component index dropped 0.26 to 10,307.48, while the Shenzhen Composite Index declined 0.21 per cent to 1,987.49.
The Nasdaq style ChiNext closed 0.60 per cent lower at 1,986.22.
China’s monetary policy will be pursued in a “neutral” manner in the coming year, a departure from last year’s “flexible” stance, according to an analysis by Macquarie Capital’s Larry Hu, parsing the Communist Party’s Central Economic Work Conference last Friday. Read the rest of this entry »
A record net $674 billion left China last year, the International Institute of Finance estimates. A further $175 billion left China in the first quarter.
Saint Chatterjee reports: Hong Kong is conducting a multi-pronged customs, shipping and financial sector crackdown against so-called fake trade invoicing that allows billions of dollars of capital to leave China illegally.
Hong Kong’s central bank told Reuters it has beefed up its scrutiny of banks’ trade financing operations, while customs officials are doing more random checks on shipments crossing border posts and conducting raids on warehouses to ensure the authenticity of goods, senior officials working in shipping, logistics and banking said. The head of a logistics company said surprise customs inspections at Hong Kong border posts had doubled.
The sources declined to be identified given the sensitivity of the issues.
They said the increased efforts began this year and reflected concerns about billions of dollars in illicit cash authorities suspect are being channeled through Hong Kong following a stock market crash in China last year.
“Examinations and investigations reflect one of the strongest trends we are seeing now in the financial sector,” said Urszula McCormack, a partner at law firm King & Wood Mallesons, which helped co-author a report published by The Hong Kong Association of Banks in February that highlighted shipping as a sector where fake invoicing can thrive.
China has become increasingly concerned about capital outflows since the middle of last year when Chinese rushed to get money offshore for safekeeping or to invest following the stock market slump and unexpected yuan devaluation.
Hong Kong is the most popular route, analysts say, because of its proximity to China.
Chinese authorities have tried to staunch the outflows by tightening cross-border investment quotas, stepping up enforcement action of existing rules and restricting residents from buying financial products, such as insurance policies, offered in Hong Kong. But the trade channel had largely been left untouched given the complexity and magnitude of transactions involved.
A record net $674 billion left China last year, the International Institute of Finance estimates. A further $175 billion left China in the first quarter. China had been a long-term net importer of dollars. Read the rest of this entry »
The number of companies with the lowest credit ratings and negative outlooks jumped to 195 in December, the highest level since March 2010, says Standard & Poor’s.
Higher interest rates are about to hit companies – just when many are ill prepared to handle them.
The Federal Reserve this month took interest rates up for the first time in nearly a decade – ending the days of free money. It might take a few years for higher rates to hit companies – as they look to refinance debt. But the troubling part is many companies aren’t in great shape to eat the higher costs.
The number of companies with the lowest credit ratings and negative outlooks jumped to 195 in December, the highest level since March 2010, says Standard & Poor’s. The biggest culprit for the jump in these so-called “weakest links” is the oil and gas sector, which accounts for 34 of them. But financial companies are close behind, representing 33 of the weakest links, says S&P….(read more)
APPL is still on track to log its worst performance in six years.
“Some of the bloom is off the rose. I think that’s a little bit unfair. We still think it’s a great story, we still think its going to have a good six months, but some of the excitement and momentum traders have backed off, probably in part because of a risk-off general attitude in the markets.”
However, the stock is still on track to log its worst performance in six years.
In 2008, Apple shares fell more than 50 percent. Since then, the stock has consistently risen 5 percent or more.
“We tend to see a little bit of a trail down in Apple going into earnings, we tend to see people be worried. And then we see the shares strengthen after the earnings are reported.”
Max Wolff, chief economist at Manhattan Venture Partners, said the stock’s lackluster performance this year is likely due to concern about the completion of the Apple car, sales of the new Apple watch and more risk-averse investors.
“Some of the bloom is off the rose,” Wolff said Friday on CNBC’s “Trading Nation.” “I think that’s a little bit unfair. We still think it’s a great story, we still think its going to have a good six months, but some of the excitement and momentum traders have backed off, probably in part because of a risk-off general attitude in the markets.”
However, Wolff said Apple’s third-quarter earnings report, which is scheduled for Oct. 27, could bring some of that excitement back. Read the rest of this entry »
China’s stock market, a crude knockoff of Western versions, was practically slapped together overnight and featured countless obvious structural weak points.
“Sure, it looked fine from the outside, but anybody who saw it up close knew that it was of such poor quality that it wasn’t built to last.”
SHANGHAI—Proving to be just as flimsy and precarious as many observers had previously warned, the Chinese-made Shanghai Composite index completely collapsed Monday, sources confirmed. Read the rest of this entry »
The Dow Jones industrial average closed at session lows, off nearly 531 points and in correction territory for the first time since 2011 as all blue chips declined. The last time the index closed more than 500 points lower was on Aug. 10, 2011. In the last five years, the index has only had four instances with closing losses of more than 400 points.
“For investors the momentum and the drive of the market is now lower (than) it used to be because there’s no place to hide,” said Lance Roberts, general partner at STA Wealth Management. “Every time we hit the major technical points we kept selling.”
A trader noted that investors stopped looking at technicals and were plowing through them.
“It’s an expiration day and it looks like they’re to have for sale on the close maybe as much as a billion dollars,” said Art Cashin, director of floor trading for UBS.
The Nasdaq Composite lost 3.5 percent, also closing in correction territory and joining the other major averages in negative territory for the year.
“Right now there is a feeling of fear in the marketplace and all news is interpreted negatively and it’s interpreted indiscriminately,” said Tom Digenan, head of U.S. equities as UBS Global Asset Management…(read more)
Fears of ‘cord-cutting’ jolt stocks of traditional media firms.
Austen Hufford And Saumya Vaishampayan report: Stocks slumped on Thursday in a selloff led by shares of media companies, which have reported a flurry of disappointing earnings amid concerns about the shift away from traditional television.
“Media stocks are getting slaughtered. It’s been the long-running fear that we would eventually see cord-cutting. Everyone thought it would be a slow-moving train wreck, but Disney’s comment woke people up.”
— Aaron Clark, a portfolio manager at GW&K Investment Management
A 15% decline in Viacom Inc. dragged down the Nasdaq Composite Index, which was 1.9% lower at 5044. Before the opening bell, the media giant reported a decline in second-quarter profit and revenue, fueling worries that more consumers are cutting the cable cord and turning to the Internet for their viewing.
That again weighed on the Dow Jones Industrial Average, which declined 154 points, or 0.9%, to 17386.77. The S&P 500 fell 1% to 2079.
Disney was down 4.8% on Thursday after falling 8.4% Wednesday. 21st Century Fox Inc. declined 11% after lowering its expectations for full-year profit for fiscal 2016.
“Media stocks are getting slaughtered,” said Aaron Clark, a portfolio manager at GW&K Investment Management, which manages $25 billion in assets. “It’s been the long-running fear that we would eventually see cord-cutting. Everyone thought it would be a slow-moving train wreck, but Disney’s comment woke people up.”
Thursday’s losses come against the backdrop of tepid growth in the U.S. and around the world. Many investors are also concerned that elevated valuations on some stocks aren’t supported by earnings growth.
As well, investors are skittish ahead of the July U.S. jobs report, due out Friday, as they try to gauge the path of interest rates in the U.S. Read the rest of this entry »
Gambling Firms Aim to Raise Funds for Macau, Overseas Casino Operations
HONG KONG— For WSJ, Kate O’Keeffe & Yvonne Lee report: China’s international financial hub, located a quick ferry ride from the world’s casino capital, has seen a throng of gambling companies rush to its equity markets over the past year.
“The Asia gaming industry should be one of the fastest-growing sectors in the next decade.”
— CLSA analyst Aaron Fischer
Since July 2013, at least six casino and VIP gambling companies have unveiled plans to list in Hong Kong, often through so-called backdoor listings. These companies are either hoping to raise funds to expand abroad or to bolster business at home in Macau at a time when the enclave’s $45 billion gambling market is suffering its first revenue declines in five years.
Most recently, Nasdaq-listed Iao Kun Group Holdings Co. last month filed a formal listing application to go public “by introduction,” where no new funds are raised, hiring Rothschild (Hong Kong) Ltd. as its sponsor. The company is part of Macau’s junket industry, which brings high-spending gamblers from mainland China to Macau, issues them credit and collects players’ debts in exchange for commissions from casinos. Read the rest of this entry »