Hong Kong stocks fell on Thursday morning, as the sentiment was hurt by Federal Reserve Chair Janet Yellen’s hints that the pace of US interest rate hikes could accelerate.
China stocks barely moved in thin trading, with energy majors declining the most after the index for that sector rose the past four sessions.
In Hong Kong, the benchmark Hang Seng index dropped 0.6 per cent to 22,961.99 points at the end of the morning session, while the Hong Kong China Enterprises Index lost 0.5 per cent to 9,753.36 points.
Sentiment in Hong Kong, where the market was more exposed to global volatility than in China, was dampened after Yellen’s tone lifted US treasury yields and the dollar, making emerging markets less attractive.
Yellen had said on Wednesday that holding off too long to begin raising rates could “risk a nasty surprise down the road,” and that it “makes sense” for the Fed to gradually lift rates.
“Of course Yellen’s comment is not good news for Hong Kong stocks,” said Linus Yip, a Hong Kong-based strategist at First Shanghai Securities.
Still, he thought a bigger factor explaining Thursday’s drop would be that the previous day’s rally might have been overdone.
Yip said that recent volatility in the US dollar weighed more on market sentiment, as he hadn’t seen large capital flows out of Hong Kong.
Sectors lost ground across the board, with energy firms leading the declines, which was down around 1.3 per cent at the lunch break.
On the mainland, the blue-chip CSI300 index rose 0.1 per cent to 3,341.53 points, while the Shanghai Composite Index lost 0.1 per cent to 3,111.20 points.
China’s start-up tech-heavy ChiNext, in the spotlight after it suffered sharp falls recently, erased initial losses and inched up slightly more than 0.1 per cent at the lunch break.
Most sectors in China moved only marginally, but the energy index lost 1.2 per cent.