Hong Kong Stocks Hit 1-Month Low as Slumping Oil Prices Stir Economic Slowdown Fears: Sinopec and CNOOC Lead Decline

Shares in Hong Kong hit a one-month low as plummeting oil prices stoke concerns of an economic slowdown. The downturn was spearheaded by Chinese oil companies Sinopec and CNOOC, following a more than 4 percent drop in prices overnight, reaching nearly a three-year low.

The Hang Seng Index experienced a decrease of 0.7 per cent, closing at 17,108.71, which is the lowest it's been since August 9. There was a slight rise of less than 0.1 per cent in the Hang Seng Tech Index, while the Shanghai Composite Index pulled back by 0.8 per cent.

Sinopec, formally known as China Petroleum and Chemical, was at the forefront of companies seeing a decline, following a more than 4% drop in crude futures to nearly a three-year low point. Chinese athletic clothing producer, Li Ning, experienced a dip after Citigroup lessened its endorsement of the company's shares. Alternatively, Wuxi AppTec, a biotech company, and electric car manufacturer BYD saw an increase due to their plans to buy back shares and increase stakes.

The value of crude oil futures has dropped nearly 20% this year due to worries that consumption from China and the US, the largest users globally, will decrease while the supply from Opec members continues to be adequate.

Stephen Innes, the managing director at SPI Asset Management in Bangkok, questions whether the recent decrease in prices should be perceived as a dire warning. He suggests that the Federal Reserve may need to thoroughly examine the drastic fall in oil prices as it indicates the intensifying presence of disinflation within the economy. The lack of global demand and slow economic growth serve as potential red flags for more volatile assets.