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Hong Kong shares fall to a four-week low
12.12.2013

Hong Kong shares have fallen to a four-week low, amidst concerns of a reduction in bond purchases from the United States.

The Hang Seng Index was down 0.5 per cent at 23,216.1 points on Thursday – its lowest since November 15. That’s the day that the Chinese government unveiled details of its reform.

Yet, reuters.com reports that the reason for the fall could lie across the other side of the world, where it’s widely believed that the US budget deal could give the Federal Reserve confidence to reduce bond purchases.Shane Oliver, head of investment strategy at AMP Capital Investors Ltd., put the drop down to “a combination of Fed tapering and faster growth acceleration”.

In an interview with bloomberg.com, he explained: “After the rapid gains of the last two years, shares are no longer dirt cheap. As a result, returns are likely to be more constrained and volatile.”

Twelve out of the 35 economists recently polled by Bloomberg suggested that the US Federal Reserve’s asset purchasing strategy would slow imminently. The majority of them agreed that it will slow over the next twelve months.

The China Enterprises Index is also at a four-week low, after dropping by one per cent yesterday.


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