Stocks in Hong Kong, China broadly lower ahead of interest rate moves by US Fed, HKMA

PUBLISHED : Wednesday, 14 June, 2017, 9:15am
UPDATED : Wednesday, 14 June, 2017, 12:53pm

Shares in Hong Kong and mainland China declined in the morning session amid cautiousness ahead of a widely telegraphed interest rate increase by the US Federal Reserve, as well as the corresponding move by the Hong Kong Monetary Authority.

The Hang Seng Index fell 66.10 points, or by 0.3 per cent, to 25,785, while the Hang Seng China Enterprises Index dropped 29.08, or by 0.3 per cent, to 10,496.66. In mainland exchanges, the CSI 300 Index dropped 36.82, or by 1 per cent, to 3,545.44, while declines were recorded on both the Shanghai and Shenzhen bourses.

“The markets are digesting a fair bit of information and anticipating the Fed,” said Brett McGonegal, the chairman and chief executive of Capital Link Investment Holdings. “It makes sense after Friday’s tech wreck in the US and waiting on Mrs Yellen that the markets move cautiously while all the information is being processed.”

The shares of companies linked to Anbang Insurance plunged, after the insurer -- one of China’s biggest acquirers of assets -- confirmed that its chairman Wu Xiaohui had not reported for work. The executive may have been detained for investigations into irregularities at the company, the Caixin media organisation reported yesterday, before deleting the report.

Shares of Gemdale Corp., a property developer that’s 20 per cent owned by Anbang, fell as much as 3.8 per cent to 10.63 yuan in Shanghai. Beijing Tongrentang Co., one of China’s oldest herbalists and 8.3 per cent owned by Anbang, fell as much as 2.8 per cent to 32.80 yuan.

The stocks of several publicly traded ports operating in Liaoning province rose, after a report of China Merchants Ports consolidating their operations under one structure. China Merchants rose as much as 1.9 per cent in Hong Kong to HK$21.85.

Shares of Dalian Port jumped as much as 20.7 per cent in Hong Kong to an intraday high of HK$1.63, the highest since August 12th, and advanced almost 10 per cent on the Shanghai exchange to 3.20 yuan. Yingkou Port Liability Co., which manages the harbour in the northeastern Chinese city, jumped as much as 9.4 per cent to 3.71 yuan, while Jinzhou Port advanced 10 per cent to 4.61 yuan on the Shanghai bourse.

China’s industrial production expanded 6.5 per cent in May from a year ago, beating previous forecasts, according to the National Bureau of Statistics. The bureau also said that retail sales grew 10.7 per cent, in line with expectations.

Fixed asset investment was up 8.6 per cent on year, shy of forecasts for 8.8 per cent and down from 8.9 per cent in the previous month.

“I am not concerned by the numbers out today and believe China’s New Economy is performing amazingly, as seen through the looking glass of Alibaba and Tencent last week,”McGonegal said. “This is real and may take time to attract the capital, but it will come. There’s better time than now.”

Declines in the Hong Kong and mainland markets followed a two-day loss on the Nasdaq over the weekend. All three major US indices closed up on Tuesday with the Dow Jones Industrial Average finishing 0.4 per cent higher at 21,328.47 after touching an all-time intraday high of 21,332.77. The S&P 500 tacked on 0.5 per cent to 2,440.35 and the Nasdaq Composite rose 44.90 per cent to end at 6,220.37.

US crude futures finished higher for a third straight session and rose 38 US cents to settle at US$46.46 a barrel on Tuesday while gold futures declined less than 30 US cents to settle at US$1,268.60 an ounce.

Meanwhile, movements were limited ahead of the Federal Reserve’s two-day policy meeting that ends on Wednesday, at which the central bank is expected to raise their interest rates for the second time this year.

In Asian early morning trading, Japan’s Nikkei 225 added 0.20 per cent and South Korea’s Kospi lost 0.24 per cent.

“We see a pullback. It’s both natural and healthy to take a breather and seek a more informed vantage point before deploying more capital globally,” McGonegal said.

The People’s Bank of China on Wednesday set the yuan midpoint rate at 6.7939 per dollar prior to market open, firmer than the previous fix of 6.7971.