June 13, 2019, | AtoZMarkets - Hong Kong stock market saw a massive drop on Wednesday, weighed down by losses for Chinese companies due to rising concerns over protests in the city and Sino-American trade tensions which adversely affected the trading activities.
As per the data, the Hong Kong stock market index - Hang Seng Index dropped by 1.7% to 27,308.46 after rising 3.8% over the last four trading days. Moreover, turnover was at 76.99 billion Hong Kong dollars which is significantly lower than usual. The riots for a controversial piece of legislation in Hong Kong have affected the operations of local banks. Major bank offices in the areas where protests happen remain closed today.
Major Banking shares dropped due to the Hong Kong riots
The Hang Seng Index experienced heavy losses as a huge number of demonstrators occupied streets near the Hong Kong government's offices on Wednesday. They were protesting against a controversial bill that would allow people to be extradited to China.
A well known social media and gaming company - Tencent Holdings shares dropped 2.1%, while financial firms such as AIA Group and HSBC Holdings shares declined 2.6% and 1.2% respectively.
Also, Goldman Sachs said gross margins were likely to be weighed due to rising competition and higher demand.
Interestingly, the Hong-Kong dollar jumped 0.2% against the greenback to 7.82, its the highest level since December 2018. The currency is pegged to the USD in a range of 7.75 to 7.85.
In addition to that, Interbank interest rates in the city also rise, sending the HIBOR with a month tenor to 2.42286%, its highest level in more than a decade. Also, we can see that the Hang Seng Property Index, a measure of large developers listed in Hong Kong was dropped to 2.8%. Also, Sun Hung Kai Properties dropped 3.1%, whilst New World Development down to 4.8%.
Francis Lun, chief economist of GE Oriental Financial Group has predicted that the financial market reaction to the riots will be similar to pro-democracy demonstrations in 2014. He said, "The economy will keep on humming along, and as far as the political scene is concerned, China has control of everything. What can you do? Everyone will protest, but it will remain the same."
HSBC, Standard Chartered and OCBC Wing Hang banks get affected
The riots have affected major banking services and operations in Hong-Kong such as HSBC, Standard Chartered and OCBC Wing Hang banks. HSBC says on its website that the HSBC Pacific Place Premier Centre and Pacific Place Day & Night Plus is closed from 12 noon on June 12, 2019, until further notice due to Hong Kong protests. However, the customers of HSBC bank can use internet banking, mobile banking, and phone banking. Also, during this period at Admiralty, the bank has advised its clients to visit the Hay Wah Building Branch and Premier Centre.
Moreover, the same follows with other banks too. Standard Chartered and OCBC Wing Hang bank also have temporarily has suspended their operations till further notice.
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