China, Hong Kong markets flatline ahead of Fed decision on rates
Hong Kong shares hit a two-month low Wednesday on weak turnover as investors continued to wait on the sidelines until next week’s US interest rate decision, while in China the markets drifted sideways eking out small gains for the day.
Trading was thin in both markets with Chinese monthly consumer price inflation data coming in slightly higher than expected, at 1.5 per cent year on year growth for November. The producer price index fell lower than expected to 5.9 per cent over the same time frame, according to the National Bureau of Statistics data, extending a 45-month decline.
The Hang Seng index slipped 0.46 per cent to 21,803.76 and the H-share index fell 1.06 per cent to 9,558.76, with a total market turnover of HK$66.5 billion. The Shanghai Composite closed just 0.07 per cent higher at 3,472.44 and the CSI 300 rose 0.36 per cent to 3,635.94 while the Shenzhen Composite dropped 0.32 per cent to 2,214.21.
In a move that further underscores the severity of China’s recent clampdown on securities sector corruption and insider trading, Yao Gang was removed from his post as deputy chairman of China Securities Regulatory Commission, China’s State Council announced after the markets closed.
Yao was among dozens of high-ranking officials and senior executives at brokerages and fund houses rounded up in recent months.
The brokerage sector tracked the wider market lower on Wednesday, with Citic Securities off 0.23 per cent at HK$17.46 and Haitong Securities 1.39 per cent weaker at HK$12.78. A slight rise in crude oil prices failed to translate into concerted gains for the sector, with Petrochina off 1.32 per cent at HK$5.23 and CNOOC up 1.08 per cent at HK$8.39.
“For the local market, it’s been down quite a bit now...because of [falling] oil prices and various commodities,” said Louis Tse Ming-kwong, director at VC Brokerage in Hong Kong. “It’s no more than two weeks until Christmas. Some fund managers have already closed their portfolios – I think they’ve more or less stopped selling, unless something happens negatively. We can anticipate turnover getting slimmer.”
The mainland markets fared slightly better, with Tse saying the recoveries were a reaction to restructuring in various heavy-industry sectors such as steel.
“They are trying to stop the overcapacity in those industries, so it provides a cushion for those industries’ share prices,” Tse said.
Planned auto subsidies to encourage rural Chinese residents to buy cars coupled with a consensus-beating 24 per cent year-on-year increase in wholesale passenger vehicle sales to 2.11 million sent auto maker shares racing ahead. Geely Automobile shares accelerated 6.08 per cent to HK$4.36, Great Wall Motors climbed 5.52 per cent to HK$9.94 and electric car specialist BYD Company advanced 5.28 per cent to HK$42.90.
In the currency markets, the onshore yuan extended a near-six-week slide against the greenback weakening 0.15 per cent Wednesday to 6.4277 to the US dollar, with the offshore yuan softening 0.49 per cent to 6.5199 per dollar.