Hong Kong stocks rise on tech boost, HKMA raises base rate

SHANGHAI: Hong Kong shares rose on Thursday, led by tech stocks, after local authorities increased the base rate following a US interest rate hike.

China shares also rose, even as industrial profits extended this year’s double-digit pace of declines into a sixth month.

** China’s blue-chip CSI300 Index climbed 0.5% by the lunch break, while the Shanghai Composite Index gained 0.4%. Hong Kong’s benchmark Hang Seng Index was up 1.4%.

** The Hong Kong Monetary Authority (HKMA) raised its base rate charged through the overnight discount window by 25 basis points to 5.75%, the highest in 16 years, hours after the US Federal Reserve delivered a rate hike of the same margin.

** Tech shares traded in Hong Kong were up 3.0%, following their American Depositary Receipt (ADR) shares traded in New York.

** China’s industrial profits extended this year’s double-digit pace of declines into a sixth month, as waning demand took a toll on companies’ profit margins, bolstering the case for more supportive policy to help the economy.

** China’s industrial index was little changed.

** While structural growth concerns abound, the July Politburo meeting reaffirms view that the policy easing bias has been activated, and the window for a tactical bounce for Chinese stocks is now open, Goldman Sachs analysts wrote in a note on Wednesday.

Hong Kong stocks drop ahead of Fed

** “Offshore equities would probably give investors higher beta to the tactical upside,” the analysts said, adding this did not disqualify their strategic optimism on shares traded in China.

** Xpeng’s Hong Kong shares jumped more than 30%, hitting their highest in 11 months, after an announcement that the Chinese electric vehicle maker and Volkswagen would be entering a strategic collaboration.

** Shares of Chinese auto companies rose as much as 3.1% on the news.