Hong Kong Market falls on global trade tensions woes

The Hong Kong stock market closed lower on Tuesday, 03 December 2019, on tracking U.S. shares retreat overnight after U.S. manufacturing data for November missed market expectations, with Washington's move to reinstate tariffs on steel and aluminum from Brazil and Argentina also dented sentiment. At closing bell, the benchmark Hang Seng Index fell 0.2%, or 53.24 points, to 26,391.30. The Hang Seng China Enterprises Index dropped 0.08%, or 7.99 points, to 10,355.92.

Market fears about global trade tensions resurfaced after US President Donald Trump stunned markets with tariffs against Brazil and Argentina. President Donald Trump decided to restore tariffs on steel and aluminum imports from Brazil and Argentina, attacking what he saw as both countries' "massive devaluation of their currencies." Both South American nations were among a group of U.S. allies that Trump had exempted from steel and aluminum tariffs in March 2018. The Trump administration also proposed tariffs of up to 100% against $2.4 billion of French imports to punish France for a new digital-services tax that hits U.S. technology companies.

That added to traders' fears that the US-China trade talks under way could be threatened by Beijing's anger over US legislation supporting Hong Kong protesters, which Trump signed into law, and a proposal moving in Congress condemning alleged abuse of Muslim minorities in northwest China. China said on Monday US military ships and aircraft won't be allowed to visit Hong Kong, and also announced sanctions against several US non-government organizations for encouraging protesters to "engage in extremist, violent and criminal acts." New US tariffs on US$160 billion of Chinese goods are scheduled to go into effect on December 15.

Worsening the mood, data from the Institute for Supply Management (ISM) showed the US manufacturing sector contracted for a fourth straight month at 48.1 in November from 48.3 the month before, as new orders slid. New orders dropped to 47.2 from 49.1, matching a reading from July that was the lowest since June 2012. A reading above 50 indicates expansion in the manufacturing sector and a reading below 50 indicates contraction. That erased the market cheer from upbeat Chinese factory surveys released over the past few days.

Blue chips were mixed. HSBC (00005) softened 0.8% to HK$57.9. HKEX (00388) edged down 0.1% to HK$247.4. Tencent (00700) fell 0.6% to HK$331. China Mobile (00941) nudged up 0.1% to HK$59.4. AIA (01299) inched up 0.1% to HK$79.

Smartphone component suppliers were higher. FIH Mobile (02038) soared 3.1% to HK$1.34. AAC Technologies (02018) shot up 2.2% to HK$55.3. Sunny Optical (02382) put on 0.8% to HK$129.1. BYD Electronic (00285) added 0.9% to HK$14.1. Q Technology (01478) rose 1.5% to HK$11.84.

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