Hong Kong Stocks Plummet as HSBC Leads Losses in the Past 4 Months


After the U.K.’s voted to leave the European Union, spurring the global market turmoil, along with plunging Hong Kong stock, led by HSBC Holdings Plc and Standard Chartered Plc.

The Hang Seng Index faced a 2.9% slump at the close, which was the biggest drop seen since Feb. 11, on volumes that were twice the 30-day average. It earlier sank as much as 5.8%. HSBC gets one third of its revenues from Europe, and it has the second-largest weighting on the Hong Kong stock gauge, declining 6.6%. London-based Standard Chartered restricted its biggest slump in almost 4-years. The pound plunged more any time in the past, as a final tally came in showing 52% percent of U.K. voters opting to leave the EU.

Numerous companies in the former British colony have very strong ties to the previous ruling power. According to Partners Capital International Ltd., this would consist of parts of Li Ka-Shing’s empire, while the broader blow of the so-called Brexit would also be hurting to the European firms that were listed in the city.

Preparations were made

China's economy

Jefferies Group LLC. Commented that Friday’s declines followed the Hong Kong benchmark measure climbing over the last five days, with HSBC jumping nearly 10%, as polls boosted conjecture the U.K. was going to vote to stay in the European bloc.

Jackson Wong, associate director at Huarong International Securities Ltd. in Hong Kong, who got selling orders from worried investors once the it was known that the results favored Britain’s exit. Wong says, “There’s been some panic. It was pretty much a sure thing that Britain would remain, and even this morning the polls were showing that remain was slightly leading at one point. But from there it went downhill.”

The Hang Seng Index snapped the 5-day, 4.1% advance ,dropping to 20,259.13. The Hang Seng China Enterprises Index, a measure of mainland companies trading in Hong Kong, retreated 2.9%. The Shanghai Composite Index dropped 1.3%, extending this year’s losses to 19%. The offshore yuan slid 0.8% percent, which is the largest decline since January.

Warning from Li

Hong Kong's stocks

As Hong Kong markets were being sold off, the investors from the mainland piled in through a Shanghai stock link program, using up more than half the available daily quota, which was the most since April last year. The flows didn’t respond, with foreigners being the net seller of mainland stocks.

The unanticipated Brexit outcome collapsed global markets. Sterling tumbled by 11%, the Euro slid by more than it has since being introduced in 1999, while the yen surged. Oil sank nearly 4% to about $48 a barrel and then industrial metals also slumped. With the U.S. Treasuries as investors piled into haven assets gold soared.

Hong Kong has made arrangements and has sufficient liquidity no matter what the result is of the Brexit vote, and Hong Kong Radio Television reported citing Financial Secretary John Tsang.

Chief executive at Partners Capital in Hong Kong, Ronald Wan says, “Hong Kong is a very open market so if anyone wants to exit, it’s very easy. It’s more vulnerable than other markets.”

Bearish bets

Economy in China

Li told Bloomberg Television’s Angie Lau in an interview: “If Brexit happens, it will be detrimental to the U.K. and it will have a negative impact to the whole of Europe. Of course I hope that the U.K. doesn’t leave the EU.”

In Hong Kong PetroChina Co. declined 4.4%, sinking to a 12-year low, to lead losses by energy producers as oil tumbled. Galaxy Entertainment Group Ltd. paced the declines by Macau casino operators. Li & Fung Ltd., which is the source company providing clothes, supplies, and toys to U.S. retailers like Wal-Mart Stores Inc.

This week investors have focused on Brexit, and concern pertaining to China’s economic slowdown aided in sending bearish bets on the biggest exchange-traded fund tracking the nation’s shares in Hong Kong to the peak level. The last time it was this high was in March 2015. It is anticipated data on the nation’s industrial profits and manufacturing will be released next week.

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