A man wearing a face mask in Central walks past an electronic stock board tracking indexes on Monday. The Hang Seng Index fell 1,106.21 points, or 4.23 percent, to close at 25,040.46 for the day. (CALVIN NG / CHINA DAILY)
Hong Kong stocks on Monday dropped to their lowest point since August, as falling oil prices hammered global stock markets, already reeling from the impact of the novel coronavirus.
The benchmark Hang Seng Index at one point declined 1,218 points and fell below the 25,000 point level during the day. It closed the day with a loss of 1,106.21 points, or 4.23 percent, at 25,040.46.
We can see both supply and consumer demand are already being impacted in key sectors, such as travel and tourism, hospitality, manufacturing and retail, and it is going to extend to others
Nigel Green, chief executive and founder of deVere Group
The Hang Seng China Enterprises (H-share) Index shedded 472.49 points, or 4.52 percent, to close at 9,984.44. Market turnover surged to HK$169.64 billion (US$21.83 billion) on the main board.
“Every major stock market is getting hammered as oil prices plunge due to a price war following the breakdown of Saudi Arabia’s oil-cutting alliance with Russia over the weekend,” according to Nigel Green, chief executive and founder of deVere Group, an independent financial advisory organization.
Oil prices plunged around 25 percent on Monday, heading toward their biggest daily loss since 1991 after Saudi Arabia slashed prices and set plans for a big increase in crude production in April.
Investors took flight in apprehension of a price war between some of the world’s main oil producers.
“Oil’s sharpest one-day drop since the 1991 Gulf War has further fueled the sell-off in global stock markets that started a couple of weeks ago on fears that the coronavirus is going to severely damage economic growth,” Green noted.
China National Offshore Oil Corp fell 17.23 percent to HK$8.79 on Monday. PetroChina Co Ltd sank 9.63 percent to HK$2.72. China Petroleum and Chemical Corp was down 2.8 percent to HK$3.82.
All the 50 blue-chip companies on the Hong Kong Stock Exchange lost on Monday.
Green warned that a global recession is now almost inevitable this year with the combination of the implications of the oil standoff and the virus outbreak.
“We can see both supply and consumer demand are already being impacted in key sectors, such as travel and tourism, hospitality, manufacturing and retail, and it is going to extend to others,” he said.
As the coronavirus continues to sweep the world, confirmed cases of infection have been climbing outside China. Fourteen provinces in Italy were placed under quarantine to contain the virus.
On the Chinese mainland, the Shanghai Stock Exchange Composite Index fell 3.01 percent to finish at 2,943.29 on Monday. The Shenzhen Stock Exchange Composite Index declined by 4.09 percent to end at 11,108.55.
