China and Hong Kong stocks end mixed as investors await outcome of Federal Reserve meeting

Chinese stocks fell on Wednesday while Hong Kong stocks ended the day flat, as investors awaited the outcome of the US Federal Reserve meeting and brushed aside a meeting between US and Chinese officials to de-escalate the trade war.

The Shanghai Composite Index fell 1 per cent, or 27.09 points, to 2,549.56. The Shenzhen Component Index lost 1.5 per cent, or 111.63 points to 7,418.69.

The CSI 300 Index of big caps listed on both Shanghai and Shenzhen stock exchanges, shed 1.2 per cent, or 37.3 points to 3,091.13.

Fed chairman Jerome Powell will give his outlook for the US economy and the interest rate path for 2019 tonight. Market observers expect a 25 basis point increase in interest rates.

On Wednesday, China’s Ministry of Commerce said that talks were held at the vice-ministerial level with US officials to de-escalate the trade war as part of the 90-day truce that started on December 1.

The development came after US Treasury Secretary Steven Mnuchin said negotiators charged with hammering out a broader truce in the China-US trade war will meet in January.

“Investors see that the clock is ticking for China and the US to hammer out details on the additional 25 per cent tariffs,” said Louis Wong Wai-kit, director at Philip Capital Management in Hong Kong. “At the same time, during President Xi Jinping’s speech marking the nation’s 40th anniversary of the country’s reform and opening up Tuesday, he did not give specific directions on how China would address challenges that have arisen from the ongoing trade war with the US.”

Health care and energy stock led the declines on the mainland. Shanghai RAAS Blood Products plunged by the maximum permissible daily limit of 10 per cent to 7.57 yuan after it disclosed that one of its creditors could sell its shares pledged as collateral after defaulting on a loan. The pledged shares amount to about 2 per cent of its share capital .

PetroChina slipped 2.1 per cent to 7.47 yuan after Brent crude fell 5 per cent drop to US$56.26 a barrel on Tuesday. The Financial Times reported that the planned production curbs by global producers failed to reduce concerns about US shale output oversupply.

In Hong Kong, the Hang Seng Index rose 0.2 per cent, or 51 points, to 25,865.39 in lacklustre trading. Wednesday’s turnover of HK$57. 1 billion was hardly better than the 22-month low of HK$55 billion clocked on Monday.

Property counters performed better, with Sun Hung Kai Properties up 1.5 per cent to HK$114.9 and CK Asset Holdings adding 2.4 per cent to HK$59.2.

HMV Digital China Group, a GEM-board listed music retail chain, was the fourth most heavily traded stock. It jumped 9 per cent to 12 HK cents after losing 21 per cent on Tuesday when it disclosed that it was being put into provisional liquidation.