HONG KONG: Hong Kong’s Hang Seng index fell more than 1 percent on Tuesday to its lowest close in two months, as investor risk appetite was curbed by political uncertainty and concerns over the impact of a possible U.S. interest rate rise later this year.
Analysts also attributed the market’s weakness to a possible inclusion of mainland shares into MSCI’s global indexes, a decision that could prod global investors to increase China exposure, but reduce Hong Kong’s stock weightings.
The Hang Seng index fell 1.2 percent, to 26,989.52, the lowest close since April 9. The China Enterprises Index lost 1.8 percent, to 13,861.96 points.
“The problem with this market is that there’s no fresh money flowing in,” said Chen Zhizhong, strategist at China Merchants Securities.
“The MSCI move could affect Hong Kong stocks negatively; foreign interest in Hong Kong stocks is subdued by an expected Fed rate hike later this year; and mainland investors are looking on the sidelines amid political uncertainty.”
A plan for 2017 leaders to be elected by universal suffrage is scheduled to be voted on by legislators in Hong Kong in mid-June.
