Hong Kong Stocks Slump, Chinese Mainland Markets Pause for Weeklong Holiday

Hong Kong's Hang Seng Index tumbled 2.6 percent on Friday, led by technology and financial shares. Chinese mainland markets closed on October 1 for the weeklong National Day holiday and won't resume trading until October 8.

The decline in Hong Kong came on reduced investor sentiment toward risk after the yield on the benchmark 10-year US Treasury bond hit a 20-year high, affecting global borrowing costs, and benchmark Brent crude oil futures remained above US$100 a barrel, keeping global energy costs high.

The Hang Seng tech index lost 2.3 percent. Among Chinese mainland shares listed in the city, Iluvatar CoreX Semiconductor fell 6.6 percent, Minimax was down almost 3 percent and Z.ai, also known as Zhipu, retreated 2.3 percent. For tech heavyweights, Kuaishou lost 4.4 percent, Xiaomi shed 4 percent, Baidu was down 3 percent, Alibaba fell 2 percent and Tencent slipped 2.3. Biotech shares also tumbled, with BeOne Medicines off 5.9 percent. In the financial sector, insurer AIA tumbled 6 percent, banking giant HSBC dropped 5.4 percent and Standard Chartered fell nearly 6 percent.

In a three-day trading week abbreviated by the holiday, the benchmark Shanghai Composite Index closed up 0.3 percent on Wednesday, the Shenzhen Component Index lost 0.1 percent and the tech-focused ChiNext retreated 0.2 percent.

"The markets turned more volatile this week," said Hu Yang, an analyst with Southwest Securities, adding that a bump up from a new package of government housing policies to shore up the property sector "didn't last long."

On Tuesday, Chinese mainland shares stabilized from a day-earlier decline after the State Council, China's Cabinet, signaled more policy support for the weak real estate sector, with a 1-percentage-point mortgage loan subsidy for homes of less than 120 square meters, valued at under 1.5 million yuan (US$225,192). Property stocks rallied on the news, with debt-troubled Vanke rising 4.4 percent and Greenland up 2.7 percent. However, Vanke dropped 3.4 percent in Hong Kong on Friday.

"Property developers were among the strongest segment on Chinese mainland markets this week, but the rebound was cautious," Hu noted.

Elsewhere in Asia, the Nikkei in Japan fell 0.9 percent, but the Kospi in South Korea rose 0.5 percent.

On Wall Street, markets initially rose after a weaker-than-expected jobs report eased concerns about a further Fed rate hike this year, but rising bond yields shaved early gains. The broad S&P 500 index closed up 0.7 percent on Friday but fell 0.3 percent for the week. 

The tech-heavy Nasdaq ended up 0.6 percent for the week after a 1.2 percent increase on Friday. The benchmark 10-year Treasury bond yield ticked up to 5.273 percent after hitting a two-decade high earlier in the week. Rising yields raise borrowing costs for governments, companies and consumers, and have led to higher yields in Japan, France and the UK.