The Hang Seng Index fell 2.1% to close at 17,716.47, its lowest level since April 26. The Hang Seng Technology Index fell 2.7%. The Shanghai Composite Index fell 0.9% and 10-year Chinese government bond yields fell to a 22-year low as investors cut risk from their portfolios and turned to safe havens.
Market sentiment also plummeted as the Japanese yen fell to its lowest against the U.S. dollar since 1986, raising fears of competitive currency devaluations in the Asia-Pacific region that could spark further capital outflows. The dollar index was near its highest level this year.
The selling was broad-based, with all but five of China’s 82 biggest stocks falling.Profits at China’s industrial companies rose 0.7 percent in May from a year earlier, the statistics bureau said on Thursday, slowing from a 4 percent increase in the previous month.
“This is a setback for the economic recovery, whose momentum seems to be weakening. The property market is still on a downward trend,” said Yao Liqi, an analyst at Shenwan Hongyuan Group. “Sentiment is weak and the adjustment may continue.”
“Unlike Shanghai, Beijing did not make any major changes to home purchasing regulations, indicating the Beijing government is taking a more conservative stance on easing policies on the domestic property market,” Nomura Holdings said in a note.
The Hang Seng Index has lost about a third of its gains from its January lows on disappointing Chinese economic data and uncertainty over when the Federal Reserve might cut interest rates. High expectations are high for next month’s Third Plenum, where China’s Communist Party elite meet to decide on long-term policies and reforms.
Among the top decliners were beverage maker Nongfu Spring, down 7.4% to HK$37.10, smartphone maker Xiaomi, down 7.2% to HK$16.54, and instant noodle maker Kang Yi Holdings, down 6.5% to HK$9.39.
Other major Asian markets were generally weaker: Japan’s Nikkei fell 0.8%, while Australia’s S&P/ASX 200 and South Korea’s KOSPI both fell 0.3%.
