Hong Kong Market falls on growth woes, US-China relation

Hong Kong share market finished session significantly down on Tuesday, 02 August 2022, as worrying manufacturing data from across the globe raised concerns over a potential recession. Meanwhile, risk off mood intensified amid concerns over U.S.-China relations following reports that U.S. House of Representatives Speaker Nancy Pelosi will visit Taiwan later in the day.

At closing bell, the benchmark Hang Seng Index stumbled 476.63 points, or 2.36%, to 19,689.21. The Hang Seng China Enterprises Index was down 174.64 points, or 2.54%, to 6,702.07.

Stocks were in negative territory throughout the day as investors sought safer assets on caution ahead of Pelosi's potential arrival in Taiwan during her trip to Asia. China, which regards Taiwan as a renegade province awaiting reunification with the mainland, by force if necessary, has warned that Pelosi's visit would escalate bilateral tensions.

The United States said on Monday that it would not be intimidated by Chinese "sabre rattling" over the visit.

The Taiwan issue added to a sense of unease sparked by China, Europe and the United States on Monday reporting weakening factory activity, with that in the United States decelerating to its lowest level since August 2020.

Hong Kong is facing slowing exports and investments, as the city still enforces anti-COVID measures, as part of China's zero-COVID policy. Its borders have been mostly shut since 2020. HSBC Holdings PLC dropped about 1.5%, even after the bank logged a bumper profit and promised to raise dividends back to pre-COVID levels. The bank struggled to convince shareholders to vote against a potential proposal to spin off its Hong Kong business into a separate entity. The move has been bought up by Chinese insurer Ping An, which holds an 8.26% stake in the bank.

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