Hong Kong stocks fall for first time in four days as caution prevails ahead of Fed’s rate move

All eyes are on the US central bank’s two-day meeting, with a rise in benchmark interest rates seen as the most likely outcome

PUBLISHED : Tuesday, 12 December, 2017, 9:25am
UPDATED : Tuesday, 12 December, 2017, 10:31pm

Hong Kong stocks struggled on Tuesday, closing lower for the first time in four sessions, as caution prevailed ahead of the Federal Reserve’s highly-anticipated meeting, where a rate increase is seen as a done deal.

The Hang Seng Index (HSI) opened slightly higher, but quickly retreated and closed down 0.6 per cent, or 171.41 points, at 28,793.88.

The Hang Seng China Enterprises index, known as the H-share index, shed 1 per cent to 11,312.57.

Daily turnover for the main board decreased 4 per cent to HK$105 billion from Monday. Last week, average daily turnover was HK$121.9 billion.

“There is a tepid technical rebound in some large cap stocks, but people are generally in a wait-and-see mode to gauge upcoming Fed comments on its policy outlook,” said Stanley Chan, director of research at Emperor Securities. “Turnover is also limited as the holidays approach.”

Dragging the index the most was Tencent Holdings, which dropped 3 per cent to HK$393.2. It alone accounted for 86 points of losses on the HSI.

Another index heavyweight Ping An Insurance declined 3.3 per cent to HK$78.65.

Sunny Optical Technology (Group) shed 7.4 per cent to HK$110.3, after the company reported a month on month decrease in its November shipment volume for smartphone camera lenses. Credit Suisse cut the stock’s target price to HK$158.4, citing recent signs showing a slowdown in China’s demand for smartphones.

AAC Technologies Holdings, which supplies acoustic components for Apple’s iPhones, dropped 3.5 per cent to HK$147.6.

Online publisher China Literature, a unit of Tencent, erased 2.2 per cent to HK$86.15. Morgan Stanley initiated its coverage on the stock with a target price of HK$85 and an “equal weight” rating. The investment bank said the current price already reflects positive short term catalysts.

Insurtech firm ZhongAn Online Property & Casualty Insurance dropped 2.2 per cent to HK$66.5.

However, instant noodle maker Nissin Foods rebounded 1.5 per cent to HK$3.42 on its second day of trading. The price is still 3 per cent lower from its IPO price of HK$3.54.

There is a tepid technical rebound in some large cap stocks, but people are generally in a wait-and-see mode to gauge upcoming Fed comments on its policy outlook
Stanley Chan, Emperor Securities

On the mainland too, markets dropped.

The Shanghai Composite Index finished down 1.3 per cent at 3,280.81. The CSI 300 Index – which tracks large caps listed in Shanghai and Shenzhen – lost 1.3 per cent to 4,016.02.

The Shenzhen Composite Index and the Nasdaq-style ChiNext both dropped 1 per cent, closing at 1,901.09 and 1,798.69 respectively.

Insurance stocks were weak, with China Life Insurance losing 3.6 per cent to 30.98 yuan, Ping An Insurance off 2.8 per cent to 71.21 yuan, and New China Life Insurance down 2.6 per cent to 64.01 yuan.

Elsewhere in Asia-Pacific, Japan’s Nikkei 225 eased 0.3 per cent to 22,866.17, South Korea’s Kospi moved down 0.4 per cent to 2,461, while Australia’s S&P/ASX 200 traded 0.3 per cent higher at 6,013.2.