Hong Kong protests weigh on investor sentiment

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Hong Kong Hang Seng Index

Last Updated at 19 Sep 2017, 08:09 GMT *Chart shows local time Hang Seng intraday chart
value change %
28051.41 -

Protests in Hong Kong dragged down the stock market by nearly 2% but elsewhere in the region, the sentiment is positive.

Hong Kong's Hang Seng Index ended Monday's session lower by 1.9% to close at 23,229.21 after shedding 449 points.

The Hong Kong dollar tumbled to a six-month low against the US dollar.

Riot police fired volleys of tear gas at thousands of pro-democracy protestors early on Monday and many are concerned the clashes could intensify.

Several large banks have said they will be suspending operations in Hong Kong.

Shanghai Composite Index

Last Updated at 19 Sep 2017, 07:26 GMT SSE Composite one month chart
value change %
3356.84 -

Ryan Huang from IG Markets said businesses most likely to be affected by the unrest include retailers and tourism-related firms.

"With China's National Day Holidays starting on October 1, these companies will suffer the brunt of any drop on tourist numbers to Hong Kong," he said.

"The recent stream of China macro data has not been particularly strong to bolster investor confidence, and worsening sentiment will not do the markets any favours."

The political unrest in Hong Kong is the worst the city has seen since China took control of the previously British territory two decades ago.

M&A movers

Elsewhere in the region, shares in Australia's Treasury Wine Estates (TWE) closed down by 8.5% after falling by as much as 15% earlier in the session.

The world's largest listed wine producer said it has ended takeover talks with two private equity firms.

TWE said shareholders felt the offers from KKR and rival bidder TPG Capital Management were insufficient.

Image copyright AFP
Image caption Japan's Softbank is reportedly in talks to buy the maker of "Shrek"

Both firms had offered $5.20 Australian dollars per share, which valued Treasury Wine at about $3bn (£1.8bn).

Meanwhile, Japanese group SoftBank saw its shares jump earlier in the day, on reports that it is in talks to buy Hollywood studio Dreamworks Animation, the maker of "Shrek" and "Kung Fu Panda".

Softbank shares rose up 1.5% during the morning session in Tokyo but fell back to close down by nearly 1.2%.

Japanese drugmaker Daiichi Sankyo saw its shares fall by 1.2% after it agreed to buy US oncology specialist Ambit Biosciences.

Daiichi Sankyo will pay about $315m for the San-Diego based biopharmaceutical firm, which produces treatments for cancer and inflammatory diseases.

Japan's benchmark Nikkei index ended the Monday session higher by 0.5%.

Currency intervention

In the currency markets, the New Zealand dollar slipped to a one-year low against the US dollar following an intervention by the country's central bank to weaken its value.

Data showed the Reserve Bank of New Zealand (RBNZ) sold more than $406m worth of the currency on the open market last month in an attempt to bring it down from historic highs.

Desmond Chua from CMC Markets said the selloff was due to the "RBNZ governor Graeme Wheeler, who last week reminded traders that the kiwi (dollar) remains overvalued".

South Korea's won hit a more than five month low against the dollar, which had rallied on economic data showing robust growth.

The US economy expanded at its fastest pace in over two years during the second quarter, data on Friday showed.

"A strong dollar and a weak yen are double trouble for South Korean exporters," Hong Seok Chan, an analyst at Daishin Economic Research Institute said.

"Worries over their contagion effect on earnings have prompted foreign investors to repatriate their investments, providing more downdraft for the won."

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