Stock Carnage Spreads to China, Hong Kong With Tencent Tumbling

(Bloomberg) -- A sell off in Hong Kong and Chinese shares deepened following a slump in U.S. equities amid persistent concerns about a trade war.

The Hang Seng Index sank 3.2 percent Thursday, falling below the 26,000 support level, with every member of the gauge declining. Tencent Holdings Ltd., the most valuable stock listed in Asia, extended a record losing streak to a 10th day after the Nasdaq 100 Index plunged the most in seven years. The Shanghai Composite Index slumped as much as 3.4 percent, touching its lowest in four years. The yuan weakened 0.1 percent.

The benchmark Hong Kong equity gauge has tumbled 15 percent this year as fears of a trade war between the U.S. and China spurred an exodus from what had been the world’s best performing market as recently as January. Valuations are plummeting, with the price to earnings ratio falling into single digits this week for the first time in more than two years.

“The next key support would be 24,000,” said Daniel So, a Hong Kong-based strategist with CMB International Securities Ltd. “In the short term there could be a technical rebound led by old economy stocks because they would be beneficiaries from policy support from China.”

The Hang Seng Index was at 25,345 points at 10:30 a.m. Selling pressure is likely to increase as Hong Kong’s easy money era ends and worsening tensions between Beijing and Washington make investors more jittery. The HSI Volatility Index jumped 13 percent, the most since Aug. 2.

BAIC Motor Corp. was one of Thursday’s biggest decliners, heading for its biggest loss on record on concern Mercedez-Benz AG may raise its stake in the company. A crackdown at Chinese borders on undeclared goods hurt luxury goods companies, with Prada SpA tumbling the most in 13 months. Battery makers also sank, as Ganfeng Lithium Co.’s shares dropped as much as 28 percent on their trading debut.

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