HK stocks approach 11-year low on Fed hike; bargain-hunting caps China losses

HK stocks approach 11-year low on Fed hike; bargain-hunting caps China losses
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(Sept 22): Hong Kong stocks dropped to a near 11-year low on Thursday (Sept 22) as another hefty US interest rate hike hurt risk appetite, while bargain-hunting helped limit losses in mainland China shares.

Hong Kong equity benchmark Hang Seng fell 1.6% to 18,147.95, the lowest closing level since Dec 20, 2011.

In mainland China, the blue-chip CSI 300 index fell 0.9% to 3,869.34 points, while the Shanghai Composite Index dipped 0.2% to 3,108.91 points.

Asian markets broadly fell, trailing Wall Street, after the US Federal Reserve (Fed) delivered another 75-basis-point interest rate rise.

"In the shorter term, risk assets are likely to underperform as the increased risk of a recession is more fully discounted by markets," wrote David Chao, a global market strategist for Asia-Pacific (ex-Japan) at Invesco.

Stocks across growth and other vulnerable sectors fell after Hong Kong's central bank hiked rates in line with the Fed.

The Hang Seng Tech Index lost 1.7% to hit a six-month low. Electric-car makers including Xpeng Inc, Nio and Li Auto fell sharply.

Property shares lost 1.4%, while financial shares declined 1.9%.

China's shares were aided by signs of bargain-hunting ahead of next month's politically key Communist Party Congress event.

Chinese equity exchange-traded funds (ETFs) posted a net inflow of roughly 33 billion yuan (US$4.68 billion or RM21.27 billion) over the past month, the official Securities Times reported.

Investors poured money into mainly blue-chip ETFs such as ChinaAMC China 50 ETF and Haitai-PB CSI 300 ETF, the article said.

Bucking the trend, Shanghai's science and innovation board STAR Market and Shenzhen's start-up board ChiNext rose ahead of the imminent launch of six tech-focused ETFs that will likely channel fresh money into the sector.

An index tracking China's defence sector jumped 2.4% after Moscow's first wartime mobilisation since World War Two heightened geopolitical tensions.