Hong Kong markets slide as the economy continues to suffer

Posted December 2, 2019 10:05 p.m. EST

— Asian markets pulled back Tuesday as the region digested economic woes and broader trade tensions.

Hong Kong fell after the government reported further evidence that the local economy is suffering from long-running protests. Hong Kong's Hang Seng fell as much as 1.4% in early trading, but recovered some of that later in the morning. It was last down 0.5%.

Hong Kong's retail sales plunged more than 24% in October from a year earlier — the biggest monthly decline on record — according to government statistics released Monday.

The government attributed the decline to the protests and "increasing violence," which it said has depressed consumer sentiment and disrupted tourism activities. Last month, the government warned the city is expected to sink into its first annual recession in a decade.

Hong Kong is also set to post its first budget deficit in 15 years, Paul Chan, the city's financial secretary, told lawmakers on Monday at a legislative council meeting.

Japan's Nikkei 225 fell 0.9%, retreating from its highest close this year on Monday.

South Korea's Kospi also dropped 0.6%. China's Shanghai Composite erased 0.4%.

The broad losses in Asia also tracked overnight weakness on Wall Street.

US stocks suffered sharp losses on Monday, as data showed the US manufacturing sector unexpectedly worsened in November.

US Commerce Secretary Wilbur Ross also reminded Wall Street that the trade war may yet get worse before it gets better. Ross told Fox Business on Monday that the Trump administration could increase tariffs on China if no agreement is reached by December 15.

Trump's signing of a bill last week supporting Hong Kong protests also threatens to heighten tensions between Beijing and Washington. China has vowed to take countermeasures and said it would ban US military visits to Hong Kong, among other moves.

-- Matt Egan contributed to this report.

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