Hang Seng Index drops due to market uncertainty

The Hong Kong Hang Seng index has dropped sharply, approaching a 20% decrease from its top in January. Although it originally plummeted by almost 2%, it has since found some support and is now down by less than 1% for the day. Rumors have circulated that Chinese officials have directed funds and banks not to sell equities, however this has yet to be proven. Such directives are not unusual in China, a one-party state where the Chinese Communist Party has a long history of wielding power.

Bullying investors, on the other hand, may only provide a short-term solution to market volatility, eventually leading to larger concerns over time. In an effort to reduce the currency’s depreciation, the People’s Bank of China has set the USD/CNY reference rate approximately 10 large numbers below the projected rate, signaling a desire to moderate the yuan’s decline.

Meanwhile, Australia’s July jobs data showed a loss of 24,000 full-time jobs and a rise in the unemployment rate to 3.7%, up from 3.5% projected. The Australian Bureau of Statistics warned that these figures might be skewed due to holiday effects, but the impact on the AUD/USD exchange rate was instantaneous.

Furthermore, the Euro and British Pound are also losing ground versus the USD. The release of more hawkish Federal Open Market Committee minutes on Wednesday led US Treasury rates to climb, placing more pressure on “risk” assets. USD/JPY rose slightly, momentarily exceeding 146.50 before settling well below that level.

Risk disclaimer:

Please note that this article does not offer any instructions or suggestions regarding investment decisions. It is important for you to conduct your own research or seek professional advice from a qualified professional before conducting an investment decision.