Hang Seng slammed for 375-point loss in afternoon trade as the higher cost of money rattles investors
The city’s base lending rate was raised by 25 basis points to 2.25, according to a statement by the Hong Kong Monetary Authority, effective immediately
Hong Kong stocks were slammed more than 375 points lower in mid-afternoon trading on Thursday, led down by losses in the property sector on concerns about tighter mortgage lending after the city’s monetary authority matched the Federal Reserve in lifting its base lending rate by 25 basis points.
The Hang Seng Index dropped 1.2 per cent or 375.10 points in afternoon trade before narrowed down the loss to 0.9 per cent to close at 30,440.17. Properties developers such as Sino Land down 2.2 per cent, Hang Lund Properties down 1.7 per cent and Sun Hung Kai Properties retreating 1.4 per cent.
The Hong Kong dollar was down slightly, easing 0.01 per cent to 7.8478 per US dollar, remaining at the weak end of the currency peg.
The People’s Bank of China did not change its interest rate, reflecting the first time it has not followed the Fed during the current interest rate tightening cycle, according to Iris Pang, economist of Greater China of ING.
“It shows that credit and liquidity are tight in the middle of financial deleveraging reform,” Pang said. “But the signal is loud and clear. The central bank is worried that market risks would escalate.”
Peter Yiu, associate director of Charles Schwab Hong Kong, cautioned of rising market volatility this year, while noting that stocks remain in an uptrend.
“As long as overall financial conditions remain positive, stocks may advance,” Yiu said.