Hong Kong Hang Seng tumbles as trade and growth worries clobber investors

Headline shares of the Hong Kong market were lower on Monday, 10 December 2018, as risk aversion selloff triggered across the board on following the sell-off on Wall Street Friday after the release of disappointing U.S. jobs data for the month of November. Meanwhile, worries over slowing global growth after the world's largest economies - the United States, China and Japan - all reporting weaker-than-expected data also dampened sentiments. Selloff pressure fuelled further on fears that a fresh flare-up in tensions between Washington and Beijing could quash any chances of a trade deal. Dampening the mood at the start of the week was news China's vice foreign minister has summoned the U.S. ambassador Terry Branstad in protest over the arrest of Huawei Technologies Co.'s chief financial officer and weak data on China's slowing economy. In afternoon trades, the Hang Seng Index fell 360.38 points or 1.4% to 25,703.38. The Hang Seng China Enterprises Index dropped 121.23 points or 1.17% to 10,248.17.

China suffered another economic blow on Sunday with the return of the deflation threat, a day after it reported slower than expected growth in exports and imports. A fall in both consumer and producer price indexes was a result of weakness in demand from both Chinese consumers and investors and reflected their reluctance to spend as confidence in future growth is undermined by the trade war with the US. The figures add the challenge faced by the Chinese leadership in keeping economic growth on track ahead of the annual central economic work conference, where policies for next year will be determined. The consumer price index fell 0.3% in November 2018 from October 2018 while the producer price index dropped 0.2% - the first month-on-month fall in seven months - due to the steep fall in the price of crude oil and coal, according to data released by the National Bureau of Statistics on Sunday. On a yearly basis, China's PPI rose only 2.7% in November, the lowest reading in two years, while China's CPI in November rose 2.2% from a year earlier, the lowest in four months, the official statistics showed. The return of deflation risks, which often associated with a contraction in economic activities, provides fresh evidence that China's US$12 trillion economy is heading into trouble, even though China and US have agreed a 90-day truce in the trade war during which they will try to resolve their differences.

 

OFFSHORE MARKET: US stock market closed down on Friday, as a data showed that U.S. job growth accelerated much less than forecast in November, casting uncertainty over the pace of rate increases for next year. The report said non-farm payroll employment rose by 155,000 jobs in November after surging by a downwardly revised 237,000 jobs in October. The Dow Jones Industrial Average tumbled 558.72 points or 2.2% to 24,388.95. The S&P 500 slumped 62.87 points or 2.3% to 2,633.08, while the Nasdaq Composite plunged 219.01 points or 3.1% to 6,969.25.

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