Hong Kong stocks fall, tripped by a weak yuan, but gold shares rise after

The Hang Seng Index fell 2.2 per cent to 16,721.69 at close, but ending the week with a 0.5 per cent gain. The Hang Seng Tech Index dropped 1.8 per cent and the Shanghai Composite Index slipped 0.5 per cent.

The onshore yuan was trading around 7.2366 to a US dollar, close to its weakest level since November. The depreciation came after the Japanese yen weakened to a 34-year low against the US currency, putting more pressure on Beijing to devalue its currency to boost the competitiveness of its exports.

“Yuan’s weakness and the mediocre macro data will have a psychological impact on investors, particularly overseas investors that adopt a top-down strategy,” said Wu Kan, an investment manager at Soochow Securities. “What we need to closely watch going forward is the first-quarter earnings reports and that will matter more to the direction of the market.”

China’s export growth fell more than expected in March, shrinking by 7.5 per cent from a year ago, a reading which lagged the expected fall of 2.1 per cent surveyed by Chinese financial data provider Wind.

Hong Kong stocks have been rangebound in the past week as stock buy-backs from listed companies offset the negativity from China’s sluggish economic data and fading bets about interest-rate cuts by the US Federal Reserve.

Soochow Securities’ Wu said market would be driven by first-quarter corporate earnings reports in the weeks ahead.

Zijin Mining Group added 0.5 per cent to HK$17.84 after gold prices struck another record high amid heightened demand from central banks and haven seeking investors.

“While gold mining stocks have rallied this year, they are not really outperforming bullion on the scale which would normally be expected to happen in a roaring bull market, which is what happened in the 2001 to 2011 period,” said Christopher Wood, global head of equity strategy at Jefferies & Co. “Gold mining stocks also remain extremely cheap based on the current bullion price.”

Other major Asian markets were mixed. Japan’s Nikkei 225 climbed 0.5 per cent, while South Korea’s Kospi slid 0.9 per cent and Australia’s S&P/ASX 200 lost 0.3 per cent.