Hong Seng Index fell 1.3 percent amid geopolitical and liquidity fears
Mainland state buying stabilizes Chinese onshore markets while Hong Kong investors worry about volatility driven by oil prices, AI trade struggles, and potential yen carry unwinding.
The Hang Seng Index dropped 1.3 percent in Thursday trading. Investors fear the market lacks liquidity support despite mainland China's government using state funds to buy stocks and keep onshore prices from falling too sharply. Multiple risks weigh on Hong Kong investors. Geopolitical tension remains high. Earnings growth is slow. The artificial intelligence trade faces hurdles. Recent US plans to purchase up to $6 billion of long-term Treasury bonds did not stop bond market losses. Military strikes in the Middle East pushed oil above US$100 a barrel. Worry about unwinding a Japanese yen-funded carry trade adds pressure. Fund manager Dai Ming from Huichen Asset Management stated state intervention might smooth volatility for mainland stocks briefly. He noted Hong Kong trading is marginal due to poor liquidity.
