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FTSE falls below 6,000 on Hong Kong tensions

22 May 2020

FTSE 100 falls into the red after China reportedly launched plans to impose national security legislation in Hong Kong.

The FTSE 100 has fallen into the red after China reportedly launched plans to impose national security legislation in Hong Kong, threatening to reignite tensions with the US and risking the semi autonomous city’s status as a global financial hub.

The UK blue-chip index fell 1.7% to 5,910 after Asian markets sold off overnight, with Hong Kong’s Hang Seng index tumbling 5%.

Asia-exposed insurer Prudential (PRU) fell to the bottom of the index, while banks HSBC (HSBA) and Standard Chartered (STAN), which derive the bulk of their revenues from the region, were down 6% at 375p and 4% lower at 375.2p respectively. 

Fiona Cincotta, analyst at City Index, said China’s move threatened to ‘open old wounds and reignite the pro-democracy demonstrations which mired the financial hub and weighed on the economy at the turn of the year’.

Deutsche Bank’s Jim Reid added the move risked ratcheting up tensions with the US. ‘This could be another wedge between China and the US, given how many politicians on both sides of the aisle supported Hong Kong’s efforts last year,’ he said.

Miners, sensitive to developments in China, the world’s top metals consumer sold off. Glencore (GLEN) fell 2.8% to 146.3p and Anglo American (AAL) dropped 2.6% to £15.59.

Burberry (BRBY) rose 2.4% or 32.5p to £14.07 after the luxury goods maker axed its final dividend but said sales fell by 27% in its fourth quarter, better than the 31% forecast by analysts.

Outside the FTSE 100, shares in the JPMorgan China Growth & Income (JCGI ) investment trust were down 6.3% at 393.4p while Fidelity China Special Situations (FCSS ) fell 3.4% to 239.5p.

Hipgnosis Songs (SONG ) gained 1.4% or 1.5p after its broker JPMorgan Cazenove said shares in the royalties fund offered ‘outstanding value’ on a 3.6% discount to its estimated net asset value of 108.3p and a 4.8% yield.

GCP Asset Backed Income (GABI ) shed 4.9% or 4p to 77p.


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