China stocks edged lower on Tuesday, bucking gains in Hong Kong and other Asian markets amid diminishing expectations of US interest rate hikes in coming months.
Both China’s blue-chip CSI300 index and the Shanghai Composite Index lost 0.2 per cent by the midday break, to 3,174.14 points and 2,929.79 points, respectively.
Upbeat economic outlook
But Hong Kong shares rose, inspired by upbeat global markets, after US Federal Reserve Chair Janet Yellen gave a largely upbeat assessment on the US economic outlook, but gave few hints on when to increase interest rates.
To some investors, the absence of a time-frame in Yellen’s remarks on Monday remarks suggests the Fed will delay its next rate hike well beyond next week.
Wang Yi, strategist at Great Wall Securities, expected China’s market to pick up eventually as the fears of an imminent US rate hike recede and on hopes that Beijing will accelerate its long-promised reforms for bloated and inefficient state enterprises.
MSCI inclusion
Investors also hope MSCI will decide next week to add some China “A” shares to its emerging market index.
China’s finance minister Lou Jiwei had said on Monday that the country has room to expand its 100 billion yuan ($15.23 billion) assistance plan for laid-off workers in industries hit by cuts in excess capacity, as Beijing pushes economic restructuring.
Key economic data
But Chinese investors were cautious on Tuesday, ahead of a as a flurry of economic data in coming weeks that will paint a clearer picture of the Chinese economy, and a long weekend which starts on Thursday.
Most sectors lost ground, with IT and materials among the biggest decliners.
FAW Car and FAW Xiali, both controlled by state-owned FAW Group, slumped for their second day, after the two automakers said they would postpone a restructuring plan aimed at eliminating conflicts of interests within the group. FAW Car slid 4 per cent and FAW Xiali nearly 6 per cent.
In Hong Kong, the Hang Seng index rose 0.8 per cent to 21,198.09 points, while the Hong Kong China Enterprises Index gained 1.0 per cent to 8,952.98.
Hong Kong-listed shares of HSBC rose 1 per cent on news that the bank will restructure its global banking division to cut costs and make the business more “agile’’.