Hong Kong Market drops 0.7% on growth fears

Headline indices of the Hong Kong financial market declined on Tuesday, 22 January 2019, as investor sentiment dipped on concerns about the global outlook after the International Monetary Fund on Monday cut its world economic growth forecasts for 2019 and 2020 due to weakness in Europe and some emerging markets, and said failure to resolve trade tensions could further destabilise a slowing global economy. The IMF's downgrade came hours after China reported its weakest quarterly growth since the financial crisis and its slowest annual expansion in 28 years, with further cooling expected this year. At closing bell, the Hang Seng Index declined 191.09 points or 0.7% to 27,005.45. The Hang Seng China Enterprises Index fell 99.57 points or 0.93% to 10,613.48.

The International Monetary Fund has warned a further slowdown in global growth in the face of growing trade tensions. The Fund in its latest World Economic Outlook has downgraded its global growth forecast for 2019 to 3.5% and 3.6% for 2020 - 0.2% and 0.1% respectively below its previous prediction. The fund warned that Britain leaving the European Union without a deal and a greater than expected slowdown in China could spark a further deterioration in sentiment and hit global growth, exasperating risks already posed by the deterioration in US-China relations. The IMF called on countries to resolve cooperatively and quickly their trade disagreements and the resulting policy uncertainty, instead of raising barriers further and destabilising an already slowing global economy.

The IMF's warning came shortly after China reported its slowest growth in 28 years for 2018, amid the trade war with the United States and cooling domestic demand. Data on Monday showed fourth-quarter economic growth cooled to 6.4% on-year, the weakest since the global financial crisis. That dragged full-year 2018 growth to 6.6%, the weakest in 28 years.

Shares of Chinese financials fell on following the slump of A-share market. CCB (00939) fell 0.6% to HK$6.65. ICBC (01398) softened 0.7% to HK$5.8. ABC (01288) dipped 1.1% to HK$3.55. BOC (03988) sank 0.9% to HK$3.48. Ping An (02318) shed 0.5% to HK$72.25. China Life (02628) also declined 1.5% to HK$18.8.

Shares of energy players declined after crude prices fell more than 1% on Tuesday on signs that an economic slowdown in China was spreading, stoking concerns about global growth and fuel demand. International Brent oil futures were at $61.94 per barrel, down 80 cents or 1.28%. U.S. West Texas Intermediate (WTI) crude futures were at $53.16 per barrel, down 1.19% or 64 cents. PetroChina (00857) dropped 3.3% to HK$4.96 even though the company issued a positive profit alert yesterday after market close. Sinopec (00386) fell 1.1% to HK$6.18. CNOOC (00883) descended 1.4% to HK$12.94.

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