Hong Kong Market drops 1.5% on Turkish lira crisis

Headline indices of the Hong Kong share market closed down on Monday, 13 August 2018, as risk aversion selloff triggered on following the weak cues from Wall Street Friday and a fresh fall in the Turkish lira amid worries about rising U.S.-Turkey tensions. At the close, the Hang Seng Index declined 430.05 points or 1.52% to 27,936.57. The Hang Seng China Enterprises Index dropped 176.57 points or 1.61% to 10,766.51. The sub-index of the Hang Seng tracking the Commerce & Industry sector declined 2.1%, the financial sector was 1.2% down, properties sector fell 1.5%, and Utilities shares fell 0.67%. Turnover decreased to HK$83.5 billion from HK$84.7 billion on Friday.

Globally markets were fragile on heightened tensions between Turkey and the US. The Turkish lira retraced to a new record low in Asia's Monday trade following a recent geopolitics-triggered free fall in the currency. On Monday, the lira dropped to a fresh all-time low of 7.24 against the greenback, before paring some losses after moves were taken to assuage market nerves frayed by the currency's recent weakness. The retracement in losses came after the Turkish central bank moved to improve liquidity during Asia afternoon trade. Among the moves announced Monday was a slashing of lira required reserves held by banks by 250 basis points for all maturities. Before that, Finance Minister Berat Albayrak had said on Sunday that the government had a plan in place following the fall in the lira. The lira's plunge is reminding investors of past crises in emerging markets and rattling nerves worldwide.

Turkey has drafted an economic action plan and will start implementing it on Monday morning to ease investor concerns, Finance Minister Berat Albayrak said on Sunday, after the lira plunged to a fresh low in early Asia-Pacific trade.

Sunny Optical Technology (Group) dropped 4.7% to HK$120.50 after the smartphone camera modules and lenses maker said on Friday its July shipment volume of handset lens sets increased by 69.2% from a year earlier, missing market forecasts.

Tencent (00700) dipped 2.4% to HK$361 after its distribution platform WeGame took down "Monster Hunter" game on violation issues.

CSPC Pharmaceutical (01093) was up 0.7% to HK$20 after CICC Research recommended that investors look into the pharmaceutical sector in view of higher medical spending as China's population ages.

China Merchants Port (00144) and Bank of East Asia (00023) pounded 4% and 5.8% to HK$15.74 and HK$28.5 after the benchmark index compiler said on Friday that it would remove the stocks from the index effective 10 September. Meanwhile, Sino Biopharmaceutical (01177) and Shenzhou International (02313) will be included into the blue chip index. Sino jumped 4.1% to HK$10.78. Shenzhou gained 2% to HK$96.6.

OFFSHORE MARKET NEWS: US stock market closed down on Friday amid concerns about rising tensions between the U.S. and Turkey due to the Turkish detention of U.S. pastor Andrew Brunson. The Dow Jones Industrial Average fell 196.09 points or 0.8% to 25,313.14, the Nasdaq fell 52.67 points or 0.7% to 7,839.11 and the S&P 500 dropped 20.30 points or 0.7% to 2,833.28.

The major European markets also ended lower on Friday. The U.K.'s FTSE 100 Index slumped by 1%, the French CAC 40 Index tumbled by 1.7%, and the German DAX Index plunged by 2%.

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