Hong Kong stocks see-saw on bitcoin sell-off, unwinding of yen carry trade
‘A surge in the Japanese yen is once again playing havoc with markets,’ analyst says
The Hang Seng Index climbed 0.2 per cent to 26,095.05 at the close, paring a gain of as much as 0.9 per cent that had been spurred by optimism about an extension of the decent run this year. The Hang Seng Tech Index declined 0.4 per cent.
On the mainland, the CSI 300 Index fell 0.5 per cent and the Shanghai Composite Index retreated 0.4 per cent.
Alibaba Group Holding rose 1.4 per cent to HK$157 and Kuaishou Technology added 0.9 per cent to HK$68.95 after rolling out an artificial intelligence-backed video model. Macau casino operator Galaxy Entertainment Group rallied 2.8 per cent to HK$40.98. Limiting the gains, Li Auto fell 0.8 per cent to HK$69.75 on sluggish industry-wide data on electric-vehicle sales in China. Social media giant Tencent Holdings slipped 0.4 per cent to HK$617.
The gains in Hong Kong stocks faded as investors turned cautious after a liquidation of leverage positions on bitcoin, a barometer of risk appetite, snapped a streak of five-day gains in US equities overnight. Meanwhile, investors are guarding against possible tumult in global asset prices after the Japanese central bank hinted at an increase in the interest rate as early as this month. The yield on the two-year Japanese bond rose to its highest since 2008.
Higher borrowing costs in Japan risk unravelling the so-called carry trade, in which investors borrow a low-yield currency and reinvest in other currencies or assets with higher returns. The last rate increase in Japan, in July last year, jolted global markets, prompting sell-offs in US stocks and Treasuries as investors unwound positions to repay their yen-denominated debts.