Business

Hong Kong's 'Nasdaq of the east' has rough first day, global stocks muted

Posted July 27, 2020 1:01 a.m. EDT
Updated July 27, 2020 6:50 a.m. EDT

— Trading on Hong Kong's new Nasdaq-like technology index got off to a rough start Monday, while global stocks were muted on concerns about the risk that the economic recovery will falter because of a resurgent pandemic.

Hong Kong is looking to cement its status as a base for Chinese tech, while tensions between the United States and China escalate.

The Hang Seng TECH Index — which tracks the 30 largest tech firms that trade in the city, including Alibaba — briefly jumped 2.2% in early trade and was at one point a top performer in the region. But it then reversed course and was last down 0.8%. Citi analysts dubbed the new index the "Nasdaq of the East" last week said they expected that "high quality" Chinese tech companies will likely be attracted to Hong Kong.

The debut comes a week after Hang Seng Indexes announced its creation. HSI noted at the time that the tech sector has taken on an increasing level of importance in Hong Kong as companies including Alibaba, JD.com and NetEase — all of which trade in New York — have turned to the city for secondary listings. And Ant Group, the company behind the Chinese mobile payments business Alipay, announced last week that it has chosen both Hong Kong and Shanghai for its initial public offering.

Stocks elsewhere in Asia-Pacific were mixed. South Korea's Kospi ended up 0.8%, while China's Shanghai Composite was up 0.3%. But Hong Kong's benchmark Hang Seng dropped 0.4%, and Japan's Nikkei closed 0.2% lower. India's Sensex fell 0.5%.

European markets were mostly lower in early trading. The FTSE 100 and France's CAC 40 fell 0.5% and 0.4% respectively. Germany's DAX was up 0.1%.

Investors are continuing to monitor the progress of the coronavirus pandemic worldwide, along with tensions between the United States and China. The US consulate in Chengdu closed Monday after Beijing ordered it to shut. Last week, the US government abruptly ordered the closure of China's consulate in Houston, Texas.

Gold prices soared to a record high, surpassing $1,933 per ounce as investors sought safe haven assets amid geopolitical uncertainty and fears for the economy.

The US dollar, meanwhile, struggled as traders worried about the strength of the US recovery after jobless claims unexpectedly rose last week for the first time in four months. The greenback weakened on Monday against both the Japanese yen and the euro, down 0.5% and 0.4% respectively from the previous session.

Investors are looking ahead to the Federal Reserve's monetary policy meeting on Wednesday and Thursday, at which the US central bank is expected to update its economic forecast and interest rate stance. Tech stocks are also likely to set the tone, with Google-parent Alphabet, Amazon, Apple and Facebook all due to post earnings this week.

US stocks may open on a positive footing. Futures for the Dow, Nasdaq and S&P 500 were up between 0.4% and 0.8%.

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