Hong Kong stocks edge down as investors eye funding conditions
SHANGHAI: Hong Kong shares were slightly down on Monday, as investors assessed the potential for tighter cash supplies and monitored tensions in the Middle East for a likely hit to sentiment. China stocks were mixed.
China's blue-chip CSI300 Index was down 0.20 per cent by the lunch break, while the Shanghai Composite Index gained 0.20 per cent. Hong Kong benchmark Hang Seng was down 0.10 per cent.
The Hong Kong dollar slipped to 7.85 per US dollar on Monday, hitting the weak end of its trading band for the second time since May 2023. The move may prompt the Hong Kong Monetary Authority to drain liquidity from the banking system to support the currency.
Hong Kong market liquidity is unlikely to ease further and may even tighten as Hong Kong Interbank Offered Rates (HIBOR) have likely bottomed out and southbound inflows have slowed, said Kevin Liu, strategist at China International Capital Corporation (CICC).
The overnight HIBOR, a key barometer of liquidity, hovered near a record low at 0.01777 per cent.
"Short-term liquidity tightening, uncertainties surrounding tariff negotiations, weakening economic data, and delays in policy support could all contribute to increased market volatility," Liu said.
Risk sentiment was further limited as global investors waited to see if Iran would retaliate against US attacks on its nuclear sites, with resulting risks to global activity and inflation.
China's Coal Index rose 1.30 per cent.
Maritime shipping and port shares broadly rose, with Nanjing Port up to 10 per cent.
Hua Hong Semi listed in Hong Kong jumped 7 per cent, after media reported that the US government weighs additional restrictions on China, including revoking waivers that allow global chip makers to access American technology in China.
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