Hong Kong Protests Drag the Hang Seng Stock Index to Two-Month lows

Hong Kong’s main stock index was dragged down by the Occupy Central protests in the city, as pro-democracy protests extended into the workweek after the riot police’s violent response.

The protestors are demanding that China pull back its proposal to implement political reforms in Hong Kong.

The Hang Seng fell lost 449.20 points on Monday or 1.90%, while the Shanghai Composite Index was unaffected by the protests, rising 0.43%.

Meanwhile, the Hong Kong dollar has already reacted negatively, hitting a six-month low against the U.S. dollar and is now headed for its biggest three-day loss since November 2011.

The escalating conflict seems to provide more of a negative catalyst for stocks in Hong Kong, which at the beginning of the month was pushing new record highs. The protests-induced sell-off has witnessed a drop over 6.4% since then, hitting two-month lows.

Together with the worsening sentiment in Hong Kong, which is expected to hit the financial, tourism and retail sectors of Hong Kong, the recent stream of macroeconomic data in China has failed to buoy confidence as well.