Hong Kong stocks slip to 1-week low before China trade reports, yuan weakness

Hong Kong stocks dropped for a third day after a government report showed China’s exports languished for a fourth month in August, underlying the need for bigger measures to spur domestic consumption. The nation’s currency trades near a 15-year low.

The Hang Seng Index lost 1 per cent to a one-month low of 18,274.91 at the local noon trading break. The Tech Index slipped 1.5 per cent while the Shanghai Composite Index erased gains to lose 0.6 per cent.

JD.com slid 2.5 per cent to HK$129.30, Tencent lost 1.9 per cent to HK$321.40 and Meituan dropped 2.4 per cent to HK$125.20. Chinese developer Longfor retreated 1.9 per cent to HK$17.56 and China Resources Land declined 1.3 per cent to HK$33.95.

China’s biggest chip maker SMIC retreated from a two-month high, losing 5.1 per cent to HK$20.35. Some US lawmakers suggested greater curbs on concerns SMIC may have circumvented US trade sanctions in making the chip inside Huawei’s Mate Pro smartphones. Peer Hua Hong Semiconductors slid 4.8 per cent to HK$20.05.

China’s exports contracted 8.8 per cent last month, after shrinking 14.5 per cent in July, the customs bureau reported today. That was in line with consensus estimates from analysts tracked by Bloomberg. Imports fell 7.3 per cent versus 12.4 per cent in July.

With 31-degree weather and a Hong Kong taxi, HKEX opens new office in London

The onshore yuan recently traded at 7.3228 per US dollar, near the weakest since 2008, having already depreciated almost 6 per cent this year. China has been easing domestic rates to help revive the home sales and repair confidence in the property market, while the Federal Reserve has been raising rates from near-zero since March last year.

“Even with these increased policy offsets, we see the risks to our growth forecasts as skewed slightly to the downside,” Goldman Sachs said in a report on Wednesday. “Along with widening unfavourable interest-rate spreads, we think the [yuan] will continue to face depreciation pressures in the near term.”

Asian markets traded lower on Thursday. Japan’s Nikkei 225 lost 0.3 per cent, while Australia’s S&P/ASX 200 and South Korea’s Kospi declined by 0.6 to 1.2 per cent.