Hong Kong Stocks Tumble, Leading Regional Markets Lower

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05/22/2020 | 12:16 am

By Chong Koh Ping

Global shares traded lower, with Hong Kong leading regional declines after China signaled it will impose new national-security laws on the city.

In Friday morning trade, Hong Kong's Hang Seng Index lost 3.6%, with property, financial and infrastructure stocks retreating between 4% and 8%.

Other major stock benchmarks in the Asia-Pacific region dropped less steeply, tracking U.S. declines on Thursday. Japan's Nikkei 225 and Australia's benchmark S&P/ASX 200 edged 0.4% lower. South Korea's Kospi Composite and the Shanghai Composite fell 0.8% and 1.1%, respectively.

E-mini S&P 500 futures edged down 0.3%.

New security restrictions could further undermine the Western-style rule of law and freedoms that have underpinned Hong Kong's role as a global financial center.

President Trump said details on Beijing's plans aren't yet known and promised to "address that issue very strongly" if China proceeds. U.S. senators said they were introducing a bipartisan bill that would sanction Chinese officials and entities who enforce the new national-security laws in Hong Kong, and penalize banks that do business with the entities.

Ankit Khandelwal, chief investment officer at Maitri Asset Management, said markets were caught between poor economic data and U.S.-China tensions on one side, and governments' economic support measures on the other. "The tension between the U.S. and China might dictate the near-term movements of the markets," he said.

On Friday, Chinese Premier Li Keqiang, speaking at the opening of an annual gathering of lawmakers, said the government wouldn't set an economic target for 2020, pointing to the coronavirus and uncertainties around trade.

The yield on the 10-year U.S. Treasury note fell to 0.659% on Friday in Asia, from 0.677%. Yields move inversely to bond prices.

Brent crude, the global oil benchmark, fell 2.2% to $35.27 a barrel.

Write to Chong Koh Ping at chong.kohping@wsj.com

 

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