SHANGHAI: Hong Kong’s benchmark share index ended at a more than one-month high on Wednesday, as the record long US government shutdown looked set to end and market participants shifted their attention back to economic fundamentals.
Meanwhile, mainland China shares slid, as the Chinese central bank indicated limited appetite for imminent monetary easing, analysts said.
Investors will re-focus on the outlook for US monetary policy easing and await Chinese data for more clues on the health of the economy.
Members of the House of Representatives headed back to Washington on Tuesday, after a 53-day break, braving the congestion at the nation’s tangled airports for a vote that could bring the longest US government shutdown in history to a close.
At the close, the benchmark Hang Seng Index rose 0.85 percent to 26,922.73 points, the loftiest close since October 6.
“Despite limited inflation data during the government shutdown, we think inflation is in the process of peaking and evidence of that will emerge in coming months,” said Brian Martin, head of G3 economics at ANZ.
He expects a 25-basis-point Fed rate reduction in December and anticipates that the FOMC will slow the pace of rate cutting next year.
On the mainland market, the Shanghai Composite index slipped 0.07 percent to 4,000.14 points, while the blue-chip CSI300 index lost 0.13 percent.
The biggest loser on mainland was photovoltaic shares, with a sub-index tracking the industry falling 3.89 percent at the close.
China’s central bank said on Tuesday it would maintain “appropriately loose” monetary policy, keep liquidity ample and improve policy transmission, as the economy still faces risks and challenges.
“The People’s Bank of China (PBOC) is likely to rely on a mix of tools ... to keep interbank liquidity flush for the remainder of this year, and save some easing space for next year,” Xinquan Chen, economist at Goldman Sachs said in a note.
“Monetary policy is expected to remain loose in the short term, but we anticipate that the central bank may not cut interest rates further before the end of next year,” analysts at Huatai Securities said in a note.
China is due to release October credit data this week along with other indicators of economic activity such as retail sales, industrial output and investment on Friday.
All of those figures are forecast to come in weaker than September, confirming earlier data that suggested the economy has lost some momentum amid persistently weak domestic demand and US tariffs.
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