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

Hong Kong stocks slipped to a four-week low as more strategists turned bearish on the market outlook amid 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 0.6 per cent to 17,885.60 at the closing of Wednesday trading, the lowest level since August 23. The Tech Index declined 1.6 per cent while the Shanghai Composite Index eraseg gains to lose 0.5 per cent.

Tencent weakened 1 per cent to HK$309.20, Alibaba Group fell 0.4 per cent to HK$84.50, NetEase slipped 3.4 per cent to HK$154.70, and Meituan lost 2.4 per cent to HK$118.80. Property developer Longfor fell 2.1 per cent to HK$15.18 while Wuxi Biologics tumbled 3.9 per cent to HK$41.80.

Limiting the declines, oil-related stocks advanced on the outlook for crude prices after a recent surge towards US$100 a barrel. PetroChina climbed 1.6 per cent to HK$5.83 while ENN Energy jumped 1.9 per cent to HK$63.50.

Strategists at BlackRock Investment Institute this week called out China’s weak stimulus response to recharge the struggling economy. They downgraded their tactical view on Chinese equities to neutral from overweight, overturning their buy conviction since February.

The Hang Seng Index has tumbled 9.6 per cent this year, the worst performer among major global equity benchmarks, according to Bloomberg data. The CSI 300 Index of onshore companies has dropped 4.3 per cent to the lowest since November. Almost US$10 billion of stock buy-backs in Hong Kong 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 risk appetite, analysts have said, ever since China’s post-Covid reopening euphoria fizzled out. A combined 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 today. Fed fund futures are almost fully pricing in a pause in its target rate at 5.25 per cent to 5.50 per cent, according to CME Group. The Hong Kong Monetary Authority is expected to follow in lockstep on Thursday.

Two stocks debuted on Wednesday in Shanghai. Jilin Joinature Polymer jumped 7.2 per cent to 31.78 yuan, while Hunan Sund Technological surged 19.4 per cent to 79.78 yuan.

Other major Asian markets traded lower. Australia’s S&P/ASX 200 dropped 0.5 per cent, and the Nikkei 225 Index in Japan weakened 0.7 per cent, while South Korea’s Kospi was little changed.