HONG KONG’S BENCHMARK Hang Seng Index ended the week virtually flat at 22,440.25, down a touch from last Friday’s 22,444.80, after shedding 0.58% today.
Analysts said this week’s performance was a balancing act between a raft of mostly robust earnings statements from listed firms tempered by continued anxiety over the budgetary impasse in Washington, with some market watchers saying a continued US downturn could send money flowing into the Hong Kong market, which would be seen as a relatively safer haven.
Friday’s trade opened on an upswing, but quickly tapered off and headed south after news of the latest impasse from the ongoing debt ceiling debate in Washington filtered through the market.
Analysts said that all eyes will be on the US over the weekend and early next week, as the world’s biggest economy has until Tuesday, August 2, to resolve its debt ceiling imbroglio or face possible default and an almost certain downgrading of its Triple A credit rating by major agencies.
And some US politicians even assert that Moody’s and S&P are likely to downgrade the US rating even if parties on both sides of the aisle agree to raise the debt ceiling before Tuesday’s deadline.
A Chinese language piece in Sinafinance cited a CFSG analyst as saying: “The softening of the US dollar vis-à-vis the Hong Kong dollar will certainly convince some investors to transfer capital here, as the Hong Kong market is increasingly looking like a safe haven compared to the US. Therefore, higher turnover and liquidity will certainly give a boost to the Hang Seng Index going forward.”
Meanwhile, another market watcher with BOCI International said: “Investors are naturally keeping an eye on the steady stream of reasonably upbeat first half earnings reports coming out. But they would do well to also monitor any changes in daily trading turnover. Therefore, any big changes on this front – as well as any higher-than-expected results for big caps – would be buoys to vigilantly look out for.”
Given the debt ceiling standoff in Washington, and the increasingly intransigent positions seemingly adopted by both Democrats and Republicans, one of today’s biggest casualties in Hong Kong was the banking sector.
The Hang Seng’s Financial Sector Sub-index fell 0.48% today, as investors grew increasingly worried with the deadline to resolve the crisis in Washington now being only one trading day away.
China Construction Bank Corp (HK: 939) fell 0.32% today to 6.28 hkd, Industrial & Commercial Bank of China (ICBC; HK: 1398) shed 0.50% to 5.93, Bank of Communications Co Ltd (HK: 3328) lost 0.88% to 6.8 and Bank of China Ltd (HK: 3988) closed 1.37% lower at 3.59.
Meanwhile, the real estate sector, which usually moves in tandem with the financial industry given the heavy reliance of both on affordable capital, fared better, with the Property Sub-index only losing 0.03% today.
The sector finished mixed today.
Sino Land Co Ltd (HK: 83) rose 1.69% today to 13.22 hkd while peer property play China Overseas Land & Investment Ltd added 0.92% to close at 17.5.
Meanwhile, Wharf Holdings Ltd (HK: 4) fell 0.78% today to 57.35 hkd and Swire Pacific Ltd (HK: 19) closed down 0.54% at 109.8.
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