Hong Kong stocks hit 4-week low as Fed decision looms, BlackRock downgrades

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Hong Kong stocks slip to 4-week low before Fed, HKMA decisions while BlackRock loses buy conviction on China

Hong Kong stocks slipped to a four-week low as more market strategists turned bearish on the outlook on China’s housing slump and policy disappointment. Prices remained lower before an expected pause in the US policy tightening cycle.

The Hang Seng Index fell 0.4 per cent to 17,922.74.83 at 10.32am local time, the lowest level since August 22. The Tech Index declined 1.1 per cent while the Shanghai Composite Index dropped 0.3 per cent.

Tencent weakened 1 per cent to HK$309.40, NetEase slipped 2.1 per cent to HK$156.80, and Meituan lost 0.9 per cent to HK$120.60. Property developer Longfor Group tumbled 2.6 per cent to HK$15.10 while peer China Resources Land declined 1.7 per cent to HK$31.85.

Limiting declines, oil-related stocks advanced on crude price outlook after a recent surge towards US$100 a barrel. PetroChina climbed 1 per cent to HK$5.80 while ENN Energy added 2.4 per cent to HK$63.80.

Strategists at BlackRock Investment institute are the latest to call out China’s inadequate response to its economic wobble. They downgraded their tactical view on Chinese equities to neutral from overweight this week, overturning its buy conviction in February.
The Hang Seng Index has tumbled 9.2 per cent so far this year, the worst performer among major global equity benchmarks, according to Bloomberg data. The CSI 300 Index tracking largest onshore companies, has lost 4.1 per cent to trade near the lowest since November. Almost US$10 billion of stock buy-backs this year have failed to stem the losses.

BlackRock loses confidence in Chinese stocks as property slump stokes losses

Beijing’s slow-drip approach to stimulus injection has failed to arrest a slide in stock prices and risk appetite, since the early boost from China’s post-Covid reopening fizzled out. Some US$68 billion of capital outflows in July and August have driven the yuan to its weakest level in 16 years.

Sentiment remains cautious before the Fed delivers its rate decision later today, with Fed fund futures almost fully pricing in a pause in its target rate at 5.25 per cent to 5.50 per cent range, according to data compiled by CME Group. The Hong Kong Monetary Authority is expected to follow in lockstep.

Other major Asian markets traded lower. South Korea’s Kospi fell 0.1 per cent and Australia’s S&P/ASX 200 dropped 0.3 per cent, while the Nikkei 225 Index in Japan weakened 0.2 per cent.

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