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Hong Kong, mainland stocks end lower as sentiment remains dented by Yellen’s interest rate comments

Hang Seng closes down 48 points at 23,049; Cathay biggest loser among blue chips (-3.8pc), after Wednesday’s strategic review seen as lacking surprise and detail

PUBLISHED : Thursday, 19 January, 2017, 9:14am
UPDATED : Thursday, 19 January, 2017, 7:08pm

Hong Kong stocks stayed above the psychologically key 23,000 level, but ended lower on Thursday, as the benchmark Hang Seng Index lost 0.2 per cent, or 48 points, to 23,049 on Thursday after the US Federal Reserve indicated more interest rate increases would be coming this year.

The Hang Seng China Enterprises Index also shed 0.11 per cent to close at 9,792.

Energy firms led the decline, with China Shenhua Energy, the largest coalmining state-owned enterprise, losing 2.6 per cent to 15.86 yuan.

Cathay Pacific Airways was the biggest loser among blue chips in Hong Kong, as Wednesday’s strategic review by the carrier lacked surprise and detail. Its shares fell 3.8 per cent to close at HK$10.4.

Retail giant Li & Fung, which is also under the Fung family, lost 1.4 per cent to HK$3.43.

Snacks and beverage brand operator Want Want China Holdings was the best performer among blue chips, rising 2.85 per cent to HK$5.

Mainland Chinese stocks recovered from earlier losses during morning trading thanks to a continuous liquidity injection from the central bank but fell during the afternoon session, dragged down by big-cap state firms and also as investors generally stay cautious before the upcoming Lunar New Year that falls on January 28.

The Shanghai Composite Index lost 0.4 per cent to 3,101 while the blue-chip CSI300 index fell 0.3 per cent, to 3,329.29 points.

Big cap state-owned enterprises led the losses in the mainland, topped by China United Network Communications which slumped 5.1 per cent to near a two-month low.

Most sectors lost ground on the mainland bourses, particularly energy and infrastructure shares.

“We can expect both China and Hong Kong stock markets to end lower on Friday,” said Castor Pang, head of research at Core Pacific Yamaichi.

“The PBOC’s injection of funds into the Chinese bourse might help with the market for a while but it is impossible for it to solve the long-term liquidity problems this way.”

He cautioned, however, there may be a sharp slump on markets on Friday as Donald Trump’s inauguration takes place. “But I would expect the markets to recover fairly soon.” he said

Federal Reserve chair Janet Yellen said on Wednesday that it “makes sense” for the US central bank to gradually increase interest rates given that inflation is approaching the Fed’s goal of 2 per cent and full employment is around the corner. Yellen now expects several rate rises each year by the end of 2019.

The People’s Bank of China, meanwhile, has injected capital into the market for four days in a row after Shibor, the Shanghai Interbank Offered Rate, soared for five on the trot, amid the lack of liquidity.

The PBOC injected 190 billion yuan through a series of open market operations on Thursday, bringing the total amount injected over the four days to 845 billion yuan.

The financial and car sectors were the biggest drivers, offsetting the drop in energy and steel stocks.

Leshi Internet Information & Technology Corp Beijing, the listed arm of technology firm LeEco, suspended trading, saying it plans to release a clarification on media reports.

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