Tuesday saw a dramatic decline in Hong Kong shares as the markets were under pressure from U.S. Treasury yields reaching a 16-year high.
By the midday break, the Hang Seng Index had fallen 3%, hitting its lowest level since November 2022. While the Hang Seng Tech Index lost 2.9%, the Hang Seng China Enterprises Index dropped 3.4%.
Mainland China markets are closed this week for the Golden Week holiday, and Hong Kong markets were closed on Monday in observance of a national holiday. The week-long trading halt was also implemented under the China-Hong Kong stock connect programme.
According to a private sector survey released on Sunday, China’s factory activity grew more slowly in September despite higher output due to weak foreign demand.
Due to the low trading activity over the Golden Week, analysts believe there are no specific causes for the drop on Tuesday, but the market is still being affected by the hawkish U.S. Federal Reserve policy of keeping rates higher for longer.
The benchmark yield on US 10-year notes reached its highest level since 2007.
All major industries saw a drop, including technology, real estate, and banking. Due to a fall in net profit and a reduction in payouts, the Hong Kong real estate behemoth New World Development fell to a level that is over 20 years low.
The market soared friday without cause, according to Steven Leung, director of institutional sales at UOB Kay Hian in Hong Kong, and it is currently tapering down.
“If we don’t get some good news, it’s going to be a bad week,” he said, adding that markets are normally quite anxious about U.S. rates.
Days after the troubled developer claimed that its billionaire founder was under investigation for an unnamed wrongdoing, shares of China Evergrande resumed trading and increased by more than 40% earlier in the session.
Leung stated that although investors are purchasing Evergrande, there is still a great deal of uncertainty in the Chinese real estate market.
mainland property companies with Hong Kong listings decreased 4.2%.