Hong Kong stocks fell on Monday on concerns China’s devaluation of the yuan could hurt local companies, while Shanghai gained on Beijing’s pledge to keep supporting equities.

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The benchmark Hang Seng Index lost 0.74 percent, or 176.38 points, to end the day at 23,814.65 on turnover of HK$65.77 billion (US$8.48 billion).

Hong Kong shares were hit by concerns the cheaper yuan will affect local companies after China cut the value of its daily reference rate against the dollar by a record 4.4 percent last week.

Property companies with high amounts of US dollar debt, now more expensive to service, were hurt, including top developer Vanke, which fell 3.09 percent to HK$18.18 despite reporting a pick up in first-half earnings.

Analysts said the impact of the weaker yuan could be exacerbated if the US raises interest rates, expected as early as next month, which would drag up the greenback-pegged Hong Kong dollar.

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Chinese companies trading in Hong Kong, as measured by the MSCI Index, are already far more expensive than their mainland counterparts after a recent rout in Shanghai equities.

“In the longer run, the Chinese companies will outperform,” Herald van der Linde, Hong Kong based head of Asia-Pacific equity strategy at HSBC, told Bloomberg News.

Shares in Tianjin Port sank 13.04 percent to HK$1.40 — their biggest loss since 2009 — as fears mounted that hundreds of tonnes of cyanide released by deadly blasts last week could  hamper shipments long-term.

On the mainland, the benchmark Shanghai Composite Index gained 28.33 points to 3,993.67 on turnover of 626.3 billion yuan ($97.9 billion) after news Beijing will keep up state support of shares.

The Shenzhen Composite Index, which tracks stocks on China’s second exchange, rose 0.74 percent, or 17.09 points, to 2,327.49 on turnover of 560.4 billion yuan.

China Securities Finance Corp., one of the government’s key tools to support equities after some four trillion yuan was wiped off Shanghai shares in a matter of weeks, will keep its role for years to come.

It will stabilise shares in case of “abnormal fluctuations” that could cause systematic risk, China’s security regulator said after trading ended on Friday.

“The announcement is positive to the market,” Zhang Yanbing, an analyst from Zheshang Securities, told AFP.

Airline stocks were among the top gainers in Shanghai. China Eastern Airlines jumped by its 10 percent daily limit to 11.98 yuan and Hainan Airlines added 3.56 percent to 5.53 yuan.

Steel stocks also rose in Shanghai. Inner Mongolia BaoTou Steel added 3.47 percent to 5.07 yuan and Shandong Iron And Steel surged by its 10 percent daily limit to 4.81 yuan.

“Based on the time cycle, I expect the rebound to continue until the end of August,” Zhang Qi, an analyst from Haitong Securities told AFP, adding: “The market is less uncertain than before.”

Bloomberg News contributed to this report 

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