November 29, 2019 / 5:05 AM / 6 months ago

China, HK stocks drop as Sino-U.S. trade tensions escalate

* SSEC -0.6%, CSI300 -1.0%, HSI -2.0%

* HK->Shanghai Connect daily quota used -1%, Shanghai->HK daily quota used 2.4%

* FTSE China A50 -1.3%

SHANGHAI, Nov 29 (Reuters) - Hong Kong’s benchmark index dropped 2% on Friday on concerns how an overdue truce might be agreed between Washington and Beijing amid fresh trade-war headlines.

** The Hang Seng index was down 2% at 26,363.78 points, while the Hong Kong China Enterprises Index lost 2.4% to 10,309.46.

** Sino-U.S. tensions flared after the U.S. government’s decision to sign a bill backing anti-government protesters in Hong Kong.

** China warned the United States on Thursday that it would take “firm counter measures” in response to U.S. legislation backing anti-government protesters in Hong Kong, and said attempts to interfere in the Chinese-ruled city were doomed to fail.

** “The main concern is still the trade deal,” said Alex Wong, a director at Ample Finance Group in Hong Kong.

** “We are in thin trading, so as we break out on the downside some people will chase (the sell-off),” he added.

** Market participants were also worried about signs of more economic damage as the island city geared up for weekend protests.

** Hong Kong braced for a fresh wave of protests over the weekend as police on Friday withdrew from a university campus, which was the site of some of the worst clashes between protesters and security forces in nearly six months of unrest.

** Hong Kong private home prices slipped for a fifth consecutive month in October as the Asian financial hub grapples with its biggest political crisis in decades, although the pace of decline slowed.

** “Looking at the social and market situation, the price index will continue to decline in November and December,” said Thomas Lam, executive director of property consultancy Knight Frank.

** Luxury brands are likely to retreat from Hong Kong as the city is wracked by protests at a time when wealthy Chinese shoppers are staying on the mainland, consultancy Bain said on Thursday, highlighting a shift that is reshaping the global industry.

** On the mainland, stocks also eased, led by a slump in the healthcare sector after major players slashed prices in China.

** The CSI300 index fell 1% to 3,823.22 points at the end of the morning session, while the Shanghai Composite Index lost 0.6% to 2,871.08 points.

** China on Thursday reiterated its pledge to further widen market access for foreign capital and lower non-tariff trade barriers, as it aims to boost flagging trade amid a slowing economy and a trade war with the United States.

** Around the region, MSCI’s Asia ex-Japan stock index dropped 0.99%, while Japan’s Nikkei index was down 0.25%.

** The yuan was quoted at 7.0325 per U.S. dollar, 0.03% firmer than the previous close of 7.0348.

** So far this year, the Shanghai stock index climbed 15.87%, while China’s H-share index is up 4.3%. Shanghai stocks declined 1.34% so far this month.

** As of 0423 GMT, China’s A-shares were trading at a premium of 29.49% over the Hong Kong-listed H-shares. (Reporting by Luoyan Liu, Noah Sin and John Ruwitch, Editing by Sherry Jacob-Phillips)

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