The flags of the Hong Kong Stock Exchange, China's national flag, and the HKSAR flag, are seen hoisted outside the Hong Kong Stock Exchange. (ANTHONY WALLACE / AFP)
Hong Kong stocks closed lower on Friday, following a heavy selling of shares in the United States on Thursday dragged down by a sharp fall in US retail sales.
Hong Kong’s benchmark Hang Seng Index ended the day at 27,900.84, slumping by 531.21 points or 1.87 percent — its biggest loss since the start of the year. It opened 190 points lower and continued to decline to an intraday low of 27,845 during afternoon trade.
I believe we have seen expectations move from assuming China and the US will resolve their differences during this 90-day negotiating period to assuming that talks would be a success if the US doesn’t raise or apply more tariffs on March 1
Hannah Anderson
global market strategist at J.P. Morgan Asset Management
The Hang Seng China Enterprises (H-share) Index closed 233.02 points or 2.09 percent lower at 10,937.33.
The US Commerce Department said on Thursday retail sales fell 1.2 percent in December — the biggest drop in more than nine years. This underlines a sharp slowdown in economic activity at the end of 2018.
Two major US indexes ended lower, with the Dow Jones Industrial Average closing 103 points or 0.41 percent lower and the S&P 500 dropping 7 points or 0.27 percent.
In addition, negotiators from the two biggest economies concluded their trade talks in Beijing on Friday. President Xi Jinping met with the US delegation. And the two sides will meet again in Washington next week.
The Wall Street Journal reported that both sides had made some progress toward a compromise on the trade framework by signing a memorandum of understand.
There has been in a shift in the early weeks of 2019 in what investors speculate would be best-case scenario for Sino-US trade talks, said Hannah Anderson, global market strategist at J.P. Morgan Asset Management.
“I believe we have seen expectations move from assuming China and the US will resolve their differences during this 90-day negotiating period to assuming that talks would be a success if the US doesn’t raise or apply more tariffs on March 1.
“This shift reflects how eager markets, fatigued after a year of trade headlines, are to move trade issues to the back burner,” he added.
There was bearishness too among A-share investors as the Shanghai Stock Exchange Composite Index fell 1.37 percent to 2,682.38.
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