China and Hong Kong stocks declined on Friday, with investor sentiment hurt by further weakening in the yuan and news that the billionaire founder of Fosun Group could not be contacted, potentially affecting a large number of the group’s listed entities.
China’s CSI300 index fell 0.7 per cent to 3597.52 points by lunch break, while the Shanghai Composite Index lost 0.9 per cent to 3426.23 points.
In Hong Kong, the Hang Seng index was down 0.7 per cent at 21,555.9 points, while the Hong Kong China Enterprises Index sagged 1.3 per cent to 9324.66.
Weak yuan
Investors, already cautious ahead of a possible US rate hike next week, fret at a further weakening in the Chinese currency, which hit its lowest level against the dollar in nearly four-and-a-half years.
“A US rate hike would have a major impact on money flows out of emerging markets, including Hong Kong and China,’’ said Linus Yip, chief strategist at First Shanghai Securities.
“Also, if the yuan continues to depreciate, that’s negative to stocks as well, because it means investors are not confident about China’s economic restructuring.’’
Fosun founder missing
The market mood was further soured by media reports that Guo Guangchang, chairman and founder of Chinese conglomerate Fosun could not be reached, raising fears that Guo had become the latest victim in China’s deepening anti-corruption probes.
Shares of a bunch of China and Hong Kong-listed companies with ties to Fosun, including Shanghai Fosun Pharmaceutical Group, Fosun International Ltd and Shanghai Guanglian E-commerce Holdings were suspended from trading on Friday, pending announcement containing insider information.
“Investors are clearly becoming more cautious as the short-term direction of the market remains unclear,’’ said Gerry Alfonso, director at Shenwan Hongyuan Securities Co.
He added that an upcoming slew of China economic data, including money supply and industrial production, would have significant impact on stocks as well.
Most sectors in China and Hong Kong were in negative territory.