Hong Kong stocks end slightly higher ahead of US interest rate decision

Hang Seng Index ends fractionally higher, adding 9.9 point to 22,456.62

PUBLISHED : Wednesday, 14 December, 2016, 9:26am
UPDATED : Wednesday, 14 December, 2016, 9:37pm

Oil and gas equities pushed Hong Kong’s main share index slightly higher on Wednesday, but turnover was low as traders stayed on the sidelines ahead of an expected interest rate hike in the United States.

The Hang Seng Index rose 0.04 per cent, or 9.9 points, to 22,456.62, while the Hang Seng China Composite Index slipped 0.14 per cent to 9,706.15.

Traders moved to the sidelines as attention shifted to the US Federal Reserve, which is set to announce its decision on interest rates at the conclusion of its two-day policy board meeting later in the US day on Wednesday

“I think the market is looking for direction,” AMTD Financial Planning general manager Kenny Tang told the Post.

Tang said the oil and gas sector had helped support the market, but volumes had been light as traders awaited direction on the outlook during the post-meeting press conference.

Sam Chi-yung, senior strategist of South China Research, said: “I don’t see much upside momentum for Hong Kong stocks. The turnover is very low as investors wait and see the move of the Fed.”

Turnover was HK$61.60 billion, compared with HK$77.7 billion on Tuesday.

Oil stocks were among the biggest gainers, boosted by rising oil prices. PetroChina shares rose 4.51 per cent to a three month high. China Petroleum & Chemical Corporation, or Sinopec, rose 3.38 per cent to a one-month high after Bloomberg reported that the company was considering an initial public offering of its retail business next year in Hong Kong that could raise as much as US$10 billion.

In a related development, the oil refiner announced plans to sell 50 per cent of its holding in East China Gas Pipeline to China Life Insurance Company Limited and SDIC Communications Holding for 22.8 billion yuan.

“The news is positive for Sinopec because it shows the refiner is improving its operational efficiency by focusing on its main business,” Sam said.

Shanghai-listed shares of Sinopec jumped 2.18 per cent to their highest level since August last year.

HSBC also moved up 1.02 per cent, bolstered expectations of a US interest rate hike, Tang said.

Most other major sectors were weak on Wednesday, with banking, insurance, and property developers all seeing drops.

China Construction Bank slipped 0.69 per cent to a five-day low, while ICBC fell 1.05 per cent to a 10-day low.

China Evergrande Group shares fell 0.58 per cent while China Vanke shed 0.70 per cent after the mainland’s insurance regulator said Tuesday that it will tighten rules on share purchasing of insurers.

China Resources Land Limited lost 1.09 per cent, while China Overseas Land & Investment fell 0.92 per cent.

Mainland markets were lower, dragged by regulatory curbs on trading by insurance companies, Tang said.

The Shanghai Composite Index slipped 0.46 per cent or 14.51 points to 3,378.95, while the CSI 300 was down 0.77 per cent or 26.09 points to 3,378.95.

The Shenzhen Component Index fell 0.96 per cent or 99.46 points to 10,232.82, while the Nasdaq-like ChiNext fell 1.11 per cent or 21.96 points to 1,963.08, its lowest point since March.