HONG KONG: Hong Kong stocks fell 0.99 percent by the break on Monday as investors bet China’s devaluation of the yuan will hurt local companies and make mainland shares better value.
The benchmark Hang Seng Index dropped 236.82 points to 23,754.21 by the break on turnover of HK$36.89 billion (US$4.76 billion).
Analysts predict China’s shock devaluation of the yuan will take a toll on local companies, particularly retailers, by driving away big-spending mainland tourists.
An expected US rate rise, which would drive up the dollar-pegged Hong Kong currency, would also make local equities less attractive than cheaper rivals in Shanghai.
“With the interest-rate hike and slowing economy, Hong Kong will face increasing challenges,” Ben Kwong, a director at brokerage KGI Asia, told Bloomberg News.
Meanwhile, Shanghai stocks eased 0.12 percent by the break as dealers worried the devaluation of the yuan signalled Asia’s top economy is growing more slowly than thought.
The benchmark Shanghai Composite Index lost 4.73 points to 3,960.61.
The Shenzhen Composite Index, which tracks stocks on China’s second exchange, edged up 0.01 percent, or 0.47 points, to 2,310.87.
