Hong Kong stocks retreat as Fed decision looms and investors await China signals

Hong Kong stocks slipped on Monday, snapping a two-day rebound, as investors remained cautious about the US Federal Reserve’s decision on interest rate cuts and awaited clearer policy direction ahead of China’s Central Economic Work Conference later this month.

The Hang Seng Index lost 1.2 per cent to 25,765.36 at the close of trading, the biggest decline since November 21. The Hang Seng Tech Index was little changed. On the mainland, the CSI 300 Index gained 0.8 per cent and the Shanghai Composite Index strengthened 0.5 per cent.

Blind-box toymaker Pop Mart International slumped 8.5 per cent to HK$200.40, while biotechnology firm Innovent Biologics tumbled 7 per cent to HK$85.60. WeChat operator Tencent Holdings lost 0.8 per cent to HK$605.

Limiting the losses, search-engine giant Baidu jumped 3.5 per cent to HK$125.80 after it said it was assessing a spin-off listing for its non-wholly owned unit, Kunlunxin (Beijing) Technology. Chinese chipmaker Semiconductor Manufacturing International Corporation advanced 2.9 per cent to HK$71.80, while food-delivery service provider Meituan added 0.5 per cent to HK$99.50.

While the markets widely expected a rate cut this Wednesday, some analysts said risks for a hold remained while the path would be more uncertain next year.

“We now see a cut as the most likely outcome,” said Nomura’s economists in a note. “A hold remains an underpriced risk though and, in our view, data since October do not justify additional easing.”