(Bloomberg) -- Hong Kong stocks slumped, while the yuan weakened to a three-week low amid signs of a widening rift between the U.S. and China.
The Hang Seng Index fell 1.7% as of 9:32 a.m. local time, while China’s currency lost 0.1%. President Donald Trump is expected to sign a bill passed by Congress supporting Hong Kong protesters, a move which could derail a potential trade agreement with Beijing. China on Wednesday reiterated a threat to retaliate against the bill. The MSCI Hong Kong Index lost 1.9%.
“The market has been tortured by the back and forth of the trade headlines,” said Hao Zhou, a senior emerging markets economist at Commerzbank AG. “At least one thing is clear: there remains a big gap between China and the U.S.”
Risk-off sentiment has returned to global markets this week, especially in Hong Kong where protests continue to convulse the city. The U.S. bill is throwing another wrench into Hong Kong’s fourth-quarter stock rebound. A weak yuan makes matters worse, as Hang Seng Index members get an average 64% of revenue from the mainland.
To contact the reporters on this story: Sofia Horta e Costa in Hong Kong at shortaecosta@bloomberg.net;Claire Che in Beijing at yche16@bloomberg.net
To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, Sofia Horta e Costa
©2019 Bloomberg L.P.
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