HK stocks trade near lowest since 2004

Bloomberg

Hong Kong stock investors are the worst off in 16 years relative to the rest of the world as concerns mount over the impact of the coronavirus on an economy already reeling from last year’s protests.
The Hang Seng Index is near its lowest level relative to the MSCI All Country World Index since 2004, even after Monday’s brutal sell-off in the US. The Hong Kong gauge has also decoupled from mainland equities, falling to a three-year low relative to the CSI 300 Index.
Hong Kong already faced a gloomy outlook before the coronavirus emerged, as months of political unrest pushed the city’s economy into recession. Tourism has disappeared and retail is suffering, while concern over the impact of the virus on Chinese earnings is also weighing on mainland companies traded in the city. Data showed Hong Kong’s exports fell 22.7% in January year-on-year.
“Hong Kong has a rather unbalanced economy, which relies heavily on sectors like retail and tourism that will be hit hard by the virus due to less mainland visitors,” said Ronald Wan, chief executive of Partners Capital International Ltd. “It’s a market with high risk at the moment.”
The Hang Seng Index edged up 0.3% on Tuesday while the CSI 300 index slipped 0.2%.
City officials aren’t offering much optimism to investors. Paul Chan, the city’s financial secretary, wrote that Hong Kong is facing “tsunami-like” shocks and may incur a record budget deficit in the next fiscal year, with coronavirus impacts being felt beyond retail, restaurants and tourism.
Hong Kong, restrained by a currency peg to the US dollar, has no independent monetary policy. The city’s legislative council passed a $3.85 billion spending plan for virus-fighting efforts and to assist businesses. Further steps are to be introduced on Wednesday in the government’s budget proposal.
Chinese authorities have generated a long list of support measures to bolster the world’s second largest economy — cutting taxes and lowering interest rates among other moves.