Update | Hong Kong stocks retreat on profit taking as investors turn cautious over possible rate rise
Attention turns to Friday speech by US Fed Chair Janet Yellen that could provide strongest indication yet of interest rate moves
Hong Kong stocks retreated to a three-week low on profit taking after investors turned cautious in the wake of increasing expectations for a US rate increase.
The Hang Seng Index dropped 0.7 per cent or 175.4 points to 23,552.7, its lowest level since February 10, while the Hang Seng China Enterprises Index declined for the seventh consecutive trading day, down 1 per cent to 10,144.5 on Friday. For the week, the city’s benchmark lost 1.7 per cent after a decline of 0.3 per cent the previous week.
Hong Kong stocks, joining the retreat seen in other major Asian markets, slumped for the second day ahead of US Federal Reserve chairwoman Janet Yellen’s speech later on Friday, which could provide the strongest indication yet about likely interest rate moves in coming weeks.
Several Fed officials have this week stoked expectations of a rate rise in March amid the strengthening US economy. The Fed’s next policy-setting meeting is set for March 14-15.
“The Hong Kong market is testing the bottom as Federal Reserve officials turn more hawkish and the chance for a rate rise in March has surpassed 80 per cent,” said Stanley Chan, director of research at Emperor Securities.
Higher US rates will strengthen the greenback, with the DXY dollar spot index climbing 1 per cent this week, but dropping slightly by 0.1 per cent to 102.1 on Friday.
