Shanghai - Hong Kong’s benchmark
index fell for the seventh time in eight days amid steepening losses in
some of the year’s top performers, including Geely Automobile and AAC Technologies.
The Hang Seng Index was down 1.7% at 1:53 pm, poised for its lowest close since October 31. The gauge has slumped more than 5% from a decade high reached on November 22 amid concern inflows from mainland China will slow and as global equity markets retreated. Geely, AAC and Sunny Optical Technology, which have led gains on the index this year, plunged more than 7% on Wednesday.
Stocks in Hong Kong have turned into some of the world’s worst performers since the Hang Seng Index’s peak last month as investors cut holdings in shares that saw extreme rallies this year. Tencent, which accounts for almost a third of the benchmark’s 2017 gain, has tumbled 14 percent from its record high last month to wipe out $75.5bn in value.
Investors are “locking in profits earlier than usual for the year and not opening any new positions until the new year,” said Andrew Clarke, director of trading at Mirabaud (Asia).
Clarke said the profit-taking could last a while, though some investors may look at stocks like Tencent after the correction and decide to go long for next year. “Eventually, as profit taking subsides, buying for the new year will appear as people look towards 2018,” he said.
The H-share index in Hong Kong slid 2.3% on Wednesday, while the Shanghai Composite Index dropped 1%, falling below the 3,300 level for the first time since August. The Hang Seng Index dropped below a key moving average.
Daniel So, a strategist at CIMB International Securities, said the decline in Shanghai could be weighing on shares in Hong Kong, along with the profit-taking in top-performing stocks like Geely and Sunny Optical, whose losses extended to 9% and 12%, respectively, Wednesday afternoon.
So remains
bullish on Hong Kong equities, saying this correction shouldn’t last too
long and the Hang Seng Index may rise to 35 000 next year, while the
H-share index might reach 14 400. That represents gains of more than 20% for both.
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