China stock market

China and Hong Kong stocks buck US rally as trade talk, economic outlook worries outweigh Fed’s dovish tone on rate hikes

  • China and Hong Kong’s stock gauges fall at least 0.9 per cent as traders sell before the Xi and Trump talk and the release of economic data
PUBLISHED : Thursday, 29 November, 2018, 6:01pm
UPDATED : Thursday, 29 November, 2018, 10:58pm

China and Hong Kong stocks both dropped on Thursday, as doubts on the progress of the trade talks overturned the optimism from a day earlier and concerns about the strength of the mainland’s economic growth offset the dovish tone by the Federal Reserve on the prospect of interest rate increases.

The Shanghai Composite Index slid 1.3 per cent and the Hang Seng Index lost 0.9 per cent. The declines bucked gains on major benchmarks elsewhere in Asia that took cues from a rally in US equities on Wednesday. US stocks jumped the most in eight months after Fed Chairman Jerome Powell said rates were “just below” the range of a neutral policy, fanning speculation about a pause in lifting borrowing costs.

Selling intensified in the afternoon, as traders unwound their stock holdings to hedge against the risk that the Saturday meeting between Chinese President Xi Jinping and his US counterpart Donald Trump will yield no result to resolve the trade dispute. Angst over the upcoming set of the November economic data, which China International Capital Corp forecast to remain week, with flat industrial production growth and a deceleration in producer prices, compounded the sell-off.

“Investors are turning cautious and selling ahead of the Xi and Trump meeting on fear that there will be no progress made to end the trade dispute,” said Wu Kan, an investment manager at Soochow Securities in Shanghai.

“The economic data is another hangover that makes the market nervous.”

US stocks lose sway over Chinese equities as two markets show sign of decoupling

The Shanghai Composite dropped 34.29 points to 2,567.44 on Thursday, its fifth decline in six days. The gauge is heading for a 1.4 per cent drop this month. The Hang Seng Index shed 231.53 points to 26,451.03, paring its gain in November to 5.9 per cent.

The economic data is another hangover that makes the market nervous
Wu Kan, Soochow Securities

Media companies and brokerages led the decline on the mainland markets. Huayi Brothers Media slumped 4.7 per cent to 4.91 yuan in Shenzhen and Beijing Enlight Media sank 4.5 per cent to 7.22 yuan. In Shanghai, Caitong Securities tumbled 6.6 per cent to 7.71 yuan and Pacific Securities shed 6.2 per cent to 2.72 yuan.

In Hong Kong, Luk Fook Holdings International slid 6.6 per cent to HK$23.45 after Jefferies said the jeweller’s management indicated same-store sales had started to fall in the fourth quarter in a call with analysts. Its rival Chow Tai Fook Jewellery Group lost 6.9 per cent to HK$6.61, as an 8.8 per cent rise in first-half profit fell short of what the market expected.

Property developers advanced. Henderson Land Development added 2 per cent to HK$40.10 and New World Development rose 1.3 per cent to HK$10.74.