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Hong Kong - Hong Kong stocks extended last week’s slump as casino operators tumbled after Chinese authorities detained employees from billionaire James Packer’s Crown Resorts, while property developers led losses by financial shares.
The Hang Seng Index fell 0.6% at 07:13, after dropping 2.6% last week. Sands China and Galaxy Entertainment sank as the detentions, which include the head of Crown’s VIP International team, highlight the industry’s vulnerability to Chinese crackdowns.
A gauge of real estate companies headed for its lowest close since August 4.
Hong Kong’s benchmark equity gauge has fallen in October, after a 12% jump in the third quarter, as China’s exports disappointed, a raft of cities imposed restrictions to cool the property market and traders boosted bets on higher US borrowing costs.
A flood of money from mainland funds into the city’s shares has also slowed to a trickle as valuations climbed to a five-year high. China will report data including gross domestic product and industrial output on Wednesday.
"The casino industry is in a sensitive position as recent Chinese government policy has been anti-corruption," said Ronald Wan, chief executive of Partners Capital International in Hong Kong. "The rate hike in December is unavoidable. Some people use that as an excuse to sell down the Hong Kong property sector."
The Hang Seng Index slid to 23 108.65, while the Hang Seng China Enterprises Index dropped 0.3%. The Shanghai Composite Index rose 0.2%, after gaining 2% last week.
A measure of gambling companies lost 2.9%, headed for its lowest level since early September. Galaxy Entertainment, Sands China and Wynn Macau dropped at least 3%.
Crown said on Monday that Jason O’Connor, head of its VIP International team, is among those being questioned. China’s foreign ministry said Australians were detained for suspected involvement in gambling crimes, the Australian Financial Review reported.
The detention comes after Premier Li Keqiang reiterated during his visit to Macau last week the government’s push for the city to diversify its economy.
A measure of property firms listed in Hong Kong slipped 0.5%. Henderson Land Development retreated 0.9%, while New World Development lost 1%.
Fed chair Janet Yellen signaled on Friday that the central bank will remain deliberate in raising interest rates as the odds for monetary tightening in December hovered above 60%. With Hong Kong’s currency pegged to the dollar, rates in the city track those in the US.
Birmingham International tumbled 30% as it resumed trading after being suspended since December 2014. The company named Zhao Wenqing its new chief executive officer.
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