Investors fear move will further heighten tensions between Beijing and Washington
Fears that moves by China to tighten its political control over Hong Kong will lead to heightened tensions between Beijing and Washington have prompted a sharp sell-off on global markets.
With investors already anxious about the economic damage caused by the Covid-19 pandemic, the crackdown on dissent in Hong Kong caused shares to fall in both Asia and Europe.
The FTSE 100 fell by more than 100 points in early trading in London, losing almost 2% of its value and dropping back below the 6,000 level. Similar-sized falls were seen in Frankfurt and Paris.
Oil prices also dropped – falling by 5% – after Beijing proposed a new national security law that would allow it to bypass lawmakers in Hong Kong and ban “treason, secession, sedition and subversion”.
The prospect of a fresh wave of democracy protests in the former British colony led to particularly sharp drops in luxury brands such as Dior and Gucci, and in the two UK banks most exposed to Hong Kong: HSBC and Standard Chartered. Almost every share in the FTSE 100 was down as investors sought out safe havens, such as US government bonds.