September 5, 2018 / 8:43 AM / 3 months ago

HK stocks post biggest loss in 11 weeks on growth, trade war fears

Sept 5 (Reuters) - Hong Kong stocks tumbled to their worst loss in 11 weeks on Wednesday, as investors dumped property, energy and tech stocks amid worries about China’s economy and the Sino-U.S. trade war.

There are also signs money is flowing out of Hong Kong on growing anxiety that the financial turmoil in Turkey and Argentina could spread to other emerging markets.

The Hang Seng index fell 2.6 percent, to 27,243.85, while the China Enterprises Index lost 2.3 percent, to 10,645.70 points.

“China’s economy is slowing. The trade war could escalate. Corporate earnings are being downgraded. And the market gets no support from money inflows,” said Albert Xu, a strategist at Zhongtai International.

Adding to signs of an economic slowdown, fresh data showed growth in China’s services sector weakened again in August as new business picked up only slightly from July’s more than two-year low.

Investors are also bracing for a potentially major escalation in the Sino-U.S trade war. U.S. President Donald Trump has told aides he is ready to impose tariffs on another $200 billion in Chinese imports as soon as a public comment period on the plan ends this week.

Underscoring rapidly waning appetite from global investors in the region, Institute of International Finance (IIF) said in its latest capital flow report that portfolio inflows to emerging markets slowed to just $2.2 billion in August, following inflows of $13.7 billion in July.

Mainland investors are also pulling money away from Hong Kong stocks. August registered net equity sales of HK$27.7 billion yuan ($3.53 billion) by Chinese investors, marking record monthly outflows under the stock connect scheme.

Stocks fell across the board, with mainland developers listed in Hong Kong among the worst casualties, slumping over 4 percent. Index heavyweight Tencent Holdings slumped about 4 percent, dragging an index tracking tech shares

$1 = 7.8490 Hong Kong dollars Reporting by the Shanghai Newsroom Editing by Shri Navaratnam

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