Hong Kong Stocks Slide on Sino-American Tensions and Record-Setting Rise in U.S. Covid-19 Cases

Despite the benchmark's performance, HSI is still on pace to end with a monthly gain,
Anthony RussoJun 26,2020,17:25

Hong Kong stocks finished the week in red as investors have been concerned over record high of Covid-19 cases across the U.S. and trade tensions.

The most recent move comes from the U.S. Senate Thursday passing two sanction bills aiming to punish Beijing for its violations over Hong Kong’s independence.
One, known as the Hong Kong Autonomy Act would punish businesses and individuals that help China limit Hong Kong's autonomy. The second bill, introduced by Republican Senator Josh Hawley, passed as a resolution condemning China’s security law to strengthen its control over Hong Kong.

“This could be our last opportunity to stay Beijing’s hand before it destroys what is left of freedom in the city,” Hawley said.

Meanwhile, China’s health authorities reported 13 new Covid-19 cases on Friday in mainland, but that’s nothing compared to how hard the U.S. has been hit. According to Johns Hopkins University, the U.S. reported more than 40,000 infections, marking a new all-time high.

As a result, at Friday’s close, the Hang Seng Index inched nearly 1% lower to 24,549.99 points. That’s down from last Friday’s total of 24,643.89 points. Some of the biggest losers today were the telecommunications firms China Mobile Ltd., (HKEX: 00941) sinking nearly 3% to HK$53.40 per share, and China Unicom (Hong Kong) Ltd., (HKEX: 00762) falling approximately 3% at HK$4.32 per share.

One big winner today was the smartphone lens manufacturer Sunny Optical Technology (Group) Company Ltd., (HKEX: 02382) whose stock jumped 5% to HK$126.30 following Citigroup upgrading the firm to a buy and Daiwa Capital Markets reaffirming its buy rating.

The good news for shareholders is baring a monumental collapse early next week, the HSI is still on pace to end with a monthly gain. The benchmark opened the month at 23,539.91 points.

“The [likely] gain in June was because the drops in January and March were so big,” Linus Yip, a chief strategist at First Shanghai Securities said.

He added, “But global central banks’ easing monetary policies do give people hope. Liquidity is abundant, which is supporting the bond market, and economies are reopening, although the pandemic seems to be rebounding.”