SHANGHAI: Mainland China’s shares extended losses to end lower on Friday as investors squared their books for the upcoming holidays, while Hong Kong stock markets climbed on hopes that Beijing will deliver an imminent cut in its outstanding mortgage rate.
Mainland China markets will be closed on Monday and Tuesday for the Mid-Autumn Festival, while Hong Kong will be closed on Wednesday, Sept. 18.
President Xi Jinping on Thursday urged China to strive to achieve its annual economic and social development goals and tasks, raising market hopes for further policy stimulus.
China’s top legislative body has approved a proposal to raise the country’s retirement age, the official Xinhua news agency said on Friday, accelerating an overhaul of decades-old laws to tackle the economic pressure of a shrinking workforce.
At the close, the Shanghai Composite index was down 0.48% at 2,704.09 points, the lowest closing price since Feb. 5.
The blue-chip CSI300 index was down 0.42% at 3,159.25 points, the weakest close since Jan 2019. The financial sector sub-index was flat, the consumer staples sector dropped nearly 2%, the real estate index inched 0.36% higher, while the healthcare sub-index lost 0.59%.
The smaller Shenzhen index ended down 1.08% and the start-up board ChiNext Composite index was weaker by 1.073%.
Property shares rose after Bloomberg News reported on Thursday, citing unnamed sources, that China is poised to cut interest rates on more than $5 trillion of outstanding mortgages as early as this month. Hong Kong’s Hang Seng mainland properties index rose 1.19% at the midday break. At the close of trade, the Hang Seng index was up 128.70 points, or 0.75%, at 17,369.09 points.
The Hang Seng China Enterprises index rose 0.9% to 6,071.52 points. Markets were anxiously awaiting more August data due later this week, including credit lending and activity indicators, to better gauge the health of the local economy.
Market focus will also shift to the upcoming Federal Reserve policy meeting. The US central bank is all but certain to cut rates next week, although uncertainty around whether it will cut rates by 25 or 50 basis points has kept investors on the edge.
“Even though Fed’s rate cuts could be a positive catalyst, solid fundamentals would be a prerequisite for China equities to rebound,” analysts at HSBC Qianhai Securities said in a note.
“But earnings pressure remains strong post interim results, with consensus 2024 earnings forecasts for A-share companies revised down by 14.1% year-to-date. If this pattern persists, Fed easing may not be enough to boost China equities.”
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