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Hong Kong stocks end May as worst performer in Asia as Trump signals new policies in response to Beijing power grab

  • Hong Kong stocks trail regional markets in a tumultuous week as security law dominates sentiment
  • US could be quickly nearing the ‘nuclear option’ of fully revoking Hong Kong’s special privileges: Oanda

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A man walks past an electronic board showing the closing Hang Seng Index, Central on May 4. Hong Kong’s stocks have trailed regional markets this week as Beijing’s proposed security law for the city roils traders. Photo: May Tse
Zhang Shidong
Hong Kong stocks retreated for a third day, with the benchmark index capping a fourth monthly loss this year, as US President Donald Trump prepares to unveil new policies after Beijing endorsed a new security law for the city, adding to wariness of reprisal among investors.
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The Hang Seng Index lost 0.7 per cent, or 171.29 points, to 22,961.47 at the close on Friday, while the Shanghai Composite Index added 0.2 per cent. The Hong Kong stock benchmark dropped 6.8 per cent in May as the worst performer in Asia, extending its decline to 19 per cent so far this year.

The local market also trailed an around 4 per cent rally on the MSCI Asia-Pacific Index this week, as traders dialled back risk appetite over the controversial power grab. The move has added fuel to months of US-China hostility on trade and coronavirus fronts, with the city caught in between.

The Hong Kong currency was little changed at 7.753 against the US dollar on Friday, while the onshore yuan weakened 0.02 per cent.

Geely Automobile Holdings slumped the most in 16 months, making it the worst performer among members on the Hang Seng Index, after the Chinese carmaker announced a plan to sell new shares in a placement. Financials as a group led losses on concerns US sanctions could weaken their business.

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“This is not just a US-China spat, as the rest of the world is showing frustration over Beijing’s decision to impose a national security law in Hong Kong,” said Edward Moya, an analyst at Oanda in New York. “Trump could be quickly nearing the ‘nuclear option’ of fully revoking special economic and legal privileges granted to Hong Kong.”

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