Hong Kong Stocks Drop Sharply Over Fed Signal

Hong Kong stocks finished with deep losses on Thursday following a sell-off on Wall Street, with investors concerned about the recovery of the US economy.

The Hang Seng Index sank 1.6 percent, to 24,340.

On the mainland, the Shanghai Composite Index fell 0.4 percent, to 3,270, but the Shenzhen Composite Index added 0.1 percent, to 2,186.

Sydney and Seoul all lost more than 1 percent while Tokyo, Singapore, Taipei, Manila, Bangkok and Jakarta were also well down.

Wellington shed 0.5 percent, a limited drop despite data showing New Zealand's economy fell into recession for the first time in a decade after a record 12.2-percent contraction in the second quarter.

Fed chairman Jerome Powell's call for more fiscal help and the inability of US lawmakers to find common ground on a new relief package continued to overshadow investor sentiments.

"The onus on creating growth and inflation does really fall to fiscal policy, and the bipartisan politics in Washington means that a new stimulus package may not eventuate until the new year," said JP Morgan Asset Management strategist Kerry Craig.

But he did add: "Even with the risk of a delayed fiscal package, more fiscal support will be delivered. Along with easy financial conditions and a low rate outlook for the next couple of years, that should maintain a supportive backdrop for risk assets and downward pressure on the US dollar." (AFP)