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Monday, Aug 19, 2019

Hong Kong markets tumble amid China extradition protests

The Hang Seng Index was 1.6% lower as of the midday break, with local property developers among the biggest losers, while the Hong Kong dollar strengthened as much as much as 0.15%, the biggest gain in six months.

business Updated: Jun 12, 2019 11:39 IST
Tian Chen
Tian Chen
Bloomberg
Hong Kong stocks tumbled and the currency soared as interbank interest rates jumped amid protests that closed roads in the city’s financial district.
Hong Kong stocks tumbled and the currency soared as interbank interest rates jumped amid protests that closed roads in the city’s financial district.(AP File Photo)
         

Hong Kong stocks tumbled and the currency soared as interbank interest rates jumped amid protests that closed roads in the city’s financial district.

The Hang Seng Index was 1.6% lower as of the midday break, with local property developers among the biggest losers, while the Hong Kong dollar strengthened as much as much as 0.15%, the biggest gain in six months. The one-month interbank borrowing cost, known as Hibor, rose 29 basis points to about 2.42%, the highest since 2008.

While some analysts attributed the tighter liquidity to seasonal demand for cash such as dividend payments, others said the protests -- aimed at preventing the passing of a bill allowing Hong Kong to extradite its citizens to mainland China -- could be spurring concern about potential capital outflows. The squeeze has driven up the cost of shorting the Hong Kong dollar, which also contributed to the one-day jump.

“Recent political events in Hong Kong are affecting investors’ confidence on the future of the city,” Springwaters Financial Securities Ltd. Hong Kong-based strategist Sam Chi Yung said by phone. “A stronger local dollar may hurt exporters while surging Hibors mean higher funding costs for companies with more debt.”

The city’s legislative chief postponed Wednesday’s debate to a unspecified time after thousands converged on Hong Kong’s legislature, blocking roads in tactics similar to 2014 Occupy demonstrations. U.S. House Speaker Nancy Pelosi threatened legislative action in Congress to ‘reassess’ whether Hong Kong is sufficiently autonomous.\

Also read: Hong Kong leader defiant as city gears up for fresh protests over extradition bill

(The story has been published from a wire feed without any modifications to the text, only the headline has been changed.)

First Published: Jun 12, 2019 10:55 IST

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