Hang Seng ends higher after Fed holds interest rate unchanged

The Hang Seng touched a two-week high during morning trading, but pared gains in the afternoon to end the day 0.38 per cent higher

PUBLISHED : Thursday, 22 September, 2016, 9:20am
UPDATED : Thursday, 22 September, 2016, 10:51pm

Hong Kong stocks closed moderately higher on Thursday, paring back from a two-week high earlier in the day, after the Federal Reserve announced it would hold off on tightening interest rates.

The Hang Seng Index ended 0.38 per cent higher at 23,759.80 while the Hang Seng China Enterprises index rose 0.45 per cent to 9,893.80.

At one point the Hang Seng touched 24,058.65 points, its highest level since September 9.

Hantec Group International Finance managing director Gordon Tsui Luen-on attributed the positive sentiment to upbeat action in US markets, where all three major indices had gained after the Fed’s much-anticipated announcement on Wednesday afternoon in the US.

Haitong International Securities managing director for sales trading Andrew Sullivan said the Hang Seng pared back gains after the lunch break to “remain range-bound.”

Sullivan said the Fed’s policy-rate decision was beneficial to interest-rate sensitive stocks such as property developers, but added that the announcement was “not good news” for banks.

Among property companies, Henderson Land gained 1.08 per cent and Sino Land advanced 1.58 per cent. Meanwhile, banking stocks were among those with the highest turnover, with HSBC shedding 1.43 per cent to HK$58.55 and Ping An Insurance Group dropping 1.17 per cent to HK$42.15.

Energy stocks were among Thursday’s winners following a rise in crude oil prices after US government data showed inventories at their lowest level since February.

Among sectors, coal companies gained 2.38 per cent on the whole , oil and gas stocks rose 0.94 per cent. China Shenhua vaulted 4.59 per cent to HK$15.5. Sullivan attributed the rise to an increase in coal output this year amid a “government-led attempt to coordinate production”.

Also notable was Parkson Retail Group, which jumped 3.45 per cent. The company announced Monday it would sell one of its two major Beijing properties for 2.3 billion yuan.

Mainland markets also closed higher, with the Shanghai Composite Index up 0.54 per cent or 16.44 points to 3,042.31 while the CSI 300 rose 0.75 per cent or 24.48 points to 3,291.12.

The Shenzhen Composite Index rose 0.63 per cent or 12.56 points to 2,018.16 while the Nasdaq style ChiNext rose 0.29 per cent or 6.29 points to 2,168.42.

US Fed keeps rates steady as it signals one rate hike by end of year

However, Hong Kong Monetary Authority officials urged restraint on Thursday, with a spokesperson saying the chances of the Fed raising interest rates later this year are high, cautioning banks, corporations and individuals to remain vigilant and manage their risks to cope with the possible change.

Fed chair Janet Yellen has said she expects to see a rate increase in one or two of the remaining monthly policy meetings this year, if labour markets continued to improve.

In other Asian trading, the Tokyo Nikkei 225 was up 1.91 per cent to 16,807.62. The Seoul Kospi rose 0.67 per cent and the Sydney All Ordinaries gained 0.68 per cent.