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Sunday 7 February 2010
HSI tumbles below 20,000 level
Concern over ballooning budget deficits across Europe rippled through global equity markets yesterday, sending the Hang Seng Index spiralling below the 20,000-point level for the first time in five months.
Index loses 3.3pc as deficits in Europe, weakness on Wall St trigger heavy selling
Nick Westra 06 February 2010
Concern over ballooning budget deficits across Europe rippled through global equity markets yesterday, sending the Hang Seng Index spiralling below the 20,000-point level for the first time in five months.
Hong Kong’s benchmark began the trading session 300 points below the psychological barrier and it never reversed course, finishing down 676.56 points, or 3.3 per cent, at 19,665.08.
The sell-off was across the board, leaving all but one of the 42 blue chips in the red.
“Just when it looks like we may be getting over the blues, we suddenly get struck again with the European problems,” said Howard Gorges, a director at South China Brokerage.
“And of course Hong Kong is quite nervous about those things [before the weekend] so we just have to be defensive.”
After sharp overnight declines on Wall Street, investors cashed out of Asian markets yesterday to limit their exposure to any potential negative news from Europe over the weekend.
Major European economies including Greece, Spain, and Portugal are facing runaway budget deficits, which are weighing on financial markets in the region.
The euro currency bottomed out at an eight-month low against the US dollar and an 11-month low against the Japanese yen.
Representatives from the G-7 countries are gathering to take stock of the global economy. European Central Bank president Jean-Claude Trichet already tried to drum up support for the region this week and said credit support systems would remain in place.
Investors yesterday also grappled with reports of an unexpected increase in weekly jobless claims in the United States, which bounced back to a seven-week high.
Benchmarks around the region slumped to fresh lows. Japan edged closer to the 10,000-point mark, dropping 2.9 per cent to 10,057.09. Taiwan was off 4.3 per cent, South Korea slid 3.1 per cent, and Australia fell 2.3 per cent.
The Shanghai Composite Index slipped into the red for the week after dropping 1.9 per cent to 2,939.4 points yesterday. Down 10.3 per cent so far this year, it has given up ground in four of the past five weeks.
Hong Kong’s benchmark dropped for the fourth consecutive week and is down 10.1 per cent so far this year. Trading turnover topped HK$75 billion yesterday for just the second time in two weeks as sellers ruled the market.
“It is oversold, but sometimes the oversold condition remains oversold because some of the uncertain factors continue to overhang the market,” said Patrick Yiu Ho-yin, managing director of CASH Asset Management. Yiu expected the Hang Seng Index could find initial support around 19,400 points.
The index is less than 850 points away from its 250-day moving average, a technical threshold that would signal a bear market if crossed.
It has not dipped below that line since May last year when the global market rally was starting to take shape.
“We’ve been in uncharted waters and we’re coming out of it,” Geoff Lewis, the head of investment services in Hong Kong for JP Morgan Asset Management, said earlier this week. “But there is still an awful lot of uncertainty ahead.”
The Hang Seng Index dipped below the 20,000-point mark during intraday trading on Monday and twice last week before rallying above the level by market close.
Commodity counters paced declines in Hong Kong yesterday as Aluminum Corp of China plunged 6 per cent and PetroChina fell 5.8 per cent.
1 comment:
HSI tumbles below 20,000 level
Index loses 3.3pc as deficits in Europe, weakness on Wall St trigger heavy selling
Nick Westra
06 February 2010
Concern over ballooning budget deficits across Europe rippled through global equity markets yesterday, sending the Hang Seng Index spiralling below the 20,000-point level for the first time in five months.
Hong Kong’s benchmark began the trading session 300 points below the psychological barrier and it never reversed course, finishing down 676.56 points, or 3.3 per cent, at 19,665.08.
The sell-off was across the board, leaving all but one of the 42 blue chips in the red.
“Just when it looks like we may be getting over the blues, we suddenly get struck again with the European problems,” said Howard Gorges, a director at South China Brokerage.
“And of course Hong Kong is quite nervous about those things [before the weekend] so we just have to be defensive.”
After sharp overnight declines on Wall Street, investors cashed out of Asian markets yesterday to limit their exposure to any potential negative news from Europe over the weekend.
Major European economies including Greece, Spain, and Portugal are facing runaway budget deficits, which are weighing on financial markets in the region.
The euro currency bottomed out at an eight-month low against the US dollar and an 11-month low against the Japanese yen.
Representatives from the G-7 countries are gathering to take stock of the global economy. European Central Bank president Jean-Claude Trichet already tried to drum up support for the region this week and said credit support systems would remain in place.
Investors yesterday also grappled with reports of an unexpected increase in weekly jobless claims in the United States, which bounced back to a seven-week high.
Benchmarks around the region slumped to fresh lows. Japan edged closer to the 10,000-point mark, dropping 2.9 per cent to 10,057.09. Taiwan was off 4.3 per cent, South Korea slid 3.1 per cent, and Australia fell 2.3 per cent.
The Shanghai Composite Index slipped into the red for the week after dropping 1.9 per cent to 2,939.4 points yesterday. Down 10.3 per cent so far this year, it has given up ground in four of the past five weeks.
Hong Kong’s benchmark dropped for the fourth consecutive week and is down 10.1 per cent so far this year. Trading turnover topped HK$75 billion yesterday for just the second time in two weeks as sellers ruled the market.
“It is oversold, but sometimes the oversold condition remains oversold because some of the uncertain factors continue to overhang the market,” said Patrick Yiu Ho-yin, managing director of CASH Asset Management. Yiu expected the Hang Seng Index could find initial support around 19,400 points.
The index is less than 850 points away from its 250-day moving average, a technical threshold that would signal a bear market if crossed.
It has not dipped below that line since May last year when the global market rally was starting to take shape.
“We’ve been in uncharted waters and we’re coming out of it,” Geoff Lewis, the head of investment services in Hong Kong for JP Morgan Asset Management, said earlier this week. “But there is still an awful lot of uncertainty ahead.”
The Hang Seng Index dipped below the 20,000-point mark during intraday trading on Monday and twice last week before rallying above the level by market close.
Commodity counters paced declines in Hong Kong yesterday as Aluminum Corp of China plunged 6 per cent and PetroChina fell 5.8 per cent.
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