Hong Kong and Mainland China Stocks Fall Amid Lowered Expectations for Fed Rate Cuts

Hong Kong and mainland China stocks dropped after an overnight decline in major U.S. stock indices, driven by diminishing expectations for interest-rate cuts by the Federal Reserve and uncertainty over the U.S. presidential election, which could shape future U.S.-China relations.

The Hang Seng Index fell by 1.0 percent to 20,555.04 at the midday break, while the Hang Seng Tech Index tumbled 1.8 percent to 4,523.82. In mainland China, the CSI 300 Index slid by 0.8 percent, and the Shanghai Composite Index lost 0.5 percent.

“Market sentiment in both Hong Kong and the mainland turned weak as some investors decided to lock up gains over the past two days by reducing their holdings,” said Ivan Li, a fund manager at Loyal Wealth Management in Shanghai. “The market outlook remains cloudy since most investors are cautious on equity investment before China unveils a strong stimulus package to buoy the slowing economy and the embattled property sector.”

The U.S. S&P 500 Index also dropped by 0.9 percent on Wednesday, with traders skeptical about further interest rate cuts in the two remaining Federal Reserve policy meetings.

Adding to the uncertainty, the upcoming U.S. presidential election could significantly influence the U.S.-China relationship, including trade tariffs. “The outlook of the U.S.-China relationship is dependent on the U.S. election result, including the tariff situation,” said Dickie Wong, executive director at Kingston Securities. “I think the mainland government will likely retain some large-scale measures and launch them later.”

In Hong Kong, auto dealer Zhongsheng Group Holdings led the Hang Seng Index's decline, sinking by 5.7 percent to HK$11.70. Geely Automobile also fell by 4.0 percent to HK$13.96, and Chow Tai Fook Jewellery Group dropped by 4.8 percent to HK$7.47. Alibaba Group Holding declined by 3.2 percent to HK$94.15, while Meituan fell by 2.1 percent to HK$190.80.

On a more positive note, Sands China gained 3.0 percent to HK$19.22 after reporting a 16 percent increase in net income for the third quarter. AIA, an insurance giant, rose 2.0 percent to HK$62.55 after announcing a buyback of 1.01 million shares on Wednesday.

Horizon Robotics, a Chinese autonomous driving technology firm, saw its shares surge 27 percent in its Hong Kong stock market debut, climbing to HK$4.28 from its IPO price of HK$3.99 after raising US$696 million.

Elsewhere in Asia, Japan’s Nikkei 225 gained 0.1 percent, South Korea’s Kospi dropped by 0.4 percent, and Australia’s S&P/ASX 200 remained largely unchanged. 

By fLEXI tEAM