China shares edge lower; Hong Kong rises on potential mortgage cut

SHANGHAI: Mainland China’s shares slipped 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.

China stocks slip to six-year closing low

• Mainland China will be closed on Monday and Tuesday for the Mid-Autumn Festival, while the Hong Kong market 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.

• At the midday break, the Shanghai Composite index was down nearly 0.1% at 2,714.77 points.

• China’s blue-chip CSI300 index was flat, with its financial sector sub-index trading higher by 0.24%, the consumer staples sector down 1.83%, the real estate index up 0.7% and the healthcare sub-index down 0.09%.

• 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 2.4% at the midday break.

• Chinese H-shares listed in Hong Kong rose 1.05% to 6,080.42 points, while the Hang Seng Index was up 0.97% at 17,408.38 points.

• The smaller Shenzhen index was down 0.3%, the start-up board ChiNext Composite index was weaker by 0.12% and Shanghai’s tech-focused STAR5Reuters was down 0.29%.

• 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.

• Another market focus is 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.”

• Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.46%, while Japan’s Nikkei index was down 0.67%.