Hang Seng Index hits two-month low as Hong Kong protests drag

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 chaos spilled over this week after clashes between students and police heated the most this weekend. The protestors are demanding China to pull back its proposal to implement political reforms in Hong Kong, in other words, giving the former British colony full universal suffrage.

The Hang Seng index lost 449.20 points or 1.90% on Monday. On the other hand, the Shanghai Composite Index shrugged off the protests, rising 0.43%.

Meanwhile, the Hong Kong dollar is still negatively weighed by the political unrest, hitting a six-month low against the U.S. dollar, and now heading 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, offsetting the positive sentiment that pushed the benchmark to new record highs earlier this month. The protests-induced selloff has witnessed a drop over 6.4% since then, hitting two-month lows.

The recent stream of macroeconomic data in China is still far from boosting back the worsening sentiment, expected to further weigh on the financial, tourism and retail sectors of Hong Kong.