Hong Kong stocks surrender gains as mainland China funds sell into rally after Fed downshift
- The Federal Reserve raised its key rate by 25 basis points in its first meeting of the year, downshifting from 50 in December and 75 in November
- investors from mainland China were net sellers of Hong Kong stocks every day this week, taking advantage of the Lunar New Year rally
The Hang Seng Index fell 0.5 per cent to 21,958.36 at the close of trading, after rising as much as 1.1 per cent. The Tech Index and the Shanghai Composite Index were both little changed, having also surrendered intraday advances.
Alibaba Group fell 0.9 per cent to HK$109, while Tencent Holdings lost 0.5 per cent to HK$383. Hang Seng Bank fell 2 per cent to HK$126.40. Developer Country Garden slumped 4 per cent to HK$2.91, while Geely Auto lost 3.3 per cent to HK$12.84. Among winners, BYD added 0.8 per cent to near a five-month high of HK$262, while Baidu surged 5 per cent to HK$151.50.
Chinese investors were net sellers of HK$1.63 billion (US$209 million) worth of Hong Kong-listed stocks on Thursday, according to Stock Connect data. They have sold every day since returning from the Lunar New Year holiday on January 30, taking the cumulative pullback to HK$10 billion.
The selling undermined bullish sentiment created by a downshift in the Federal Reserve’s policy tightening drive. The US central bank raised its key rate by 25 basis points at its first meeting of the year, following reports of smaller increases in consumer prices in recent months.
“The market reads the decision as the first sign of a possible pivot toward growth,” said Gary Ng, a senior economist in Hong Kong at Natixis. “It means the room for further rate hikes is limited and this will boost the investors’ risk appetite.”
