Hong Kong Market falls 0.57%

Hong Kong share market closed down on Monday, 20 May 2019, as risk aversion selloff continued on reports that further trade talks between Beijing and Washington are now being put on hold. At closing bell, the Hang Seng Index declined 0.57%, or 158.85 points, to 27,787.61. The Hang Seng China Enterprises Index was down 0.52%, or 55.33 points, to 10,633.42.

Market sentiment has been hurt after reports that further trade talks between Beijing and Washington are now being put on hold. The news came after the U.S. President Donald Trump and his administration imposed sanctions on Chinese giant telecom company Huawei. U.S.-based firms are now required to have a license if they want to conduct business with the Chinese company.

An executive order by the Trump administration, aimed at banning Huawei equipment from U.S. networks, took effect on last Thursday. The order also subjects the Chinese telecommunications giant to strict export controls. China has threatened to retaliate. It remains to be seen how the move will affect trade negotiations.

On Sunday, Google has now suspended some business with Huawei and all Huawei-made phones will immediately lose access to updates to the Android operating system, the world's most popular smartphone software. Newer Huawei smartphones coming out in the future will lose access to the Google Play Store and Gmail app, according to the report.

U.S. President Donald Trump said in an interview aired on Sunday night that the tariffs on Chinese goods were causing companies to move production out of China to Vietnam and other countries in Asia. China has recently struck a sterner tone in its rhetoric, suggesting that a resumption of talks, aimed at ending the 10-month trade war between the world's two largest economies, was unlikely to happen soon.

The People's Bank of China said, in its first-quarter policy implementation report, that it would fine-tune its policy in line with changes in the economy and prices. The report seemed to send a less dovish tone for monetary policy, with the balance between growth stability and financial stability tilted a bit to the latter.

Shares of handset component plays declined after sanctions on Huawei. Google has restricted Huawei from using some updates to the Android operating system. The internet giant said it was "complying with the order and reviewing the implications". Last week, the Trump administration added Huawei to a trade blacklist. Sunny Optical (02382) sank 5% to HK$72.4. AAC Technologies (02018) edged up 0.2% to HK$43.15 after sliding to a day low of HK$41.55. Huawei's suppliers bore the brunt of the selling. Tongda Group (00698). Q Technology (01478) slumped 8.3% to HK$5.73. FIH Mobile (02038) evaporated 5.2% to HK$0.91. BYD Electronic (00285) plunged 7.4% to HK$10.56. FIT Hon Teng (06088).

Shares of public utility and yield play became target of buying. CLP (00002) jumped 2.9% to HK$89.9. It was the top blue-chip winner. Link REIT (00823) soared 2.8% to HK$97.5 after hitting all-time high of HK$97.6.

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