HONG KONG: China and Hong Kong stock benchmarks declined on Thursday, led by rate-sensitive sectors such as gold and real estate, after the first US rate hike in three years fuelled worries about capital outflows.
China’s blue-chip CSI300 Index and the Shanghai Composite Index dipped 0.4 percent each.
Hong Kong benchmark Hang Seng fell 0.3 percent.
The Federal Reserve raised interest rates on Wednesday and flagged more hikes in the coming months, setting a more hawkish tone than markets expected.
Higher US rates widened its yield premium over China.
In China, the CSI gold equity index slumped 4 percent, while an index of non-ferrous metal shares dropped 3 percent.
Hong Kong’s property firms declined nearly 1 percent.
The city raised its base interest rate by 25 basis points to 4.25 percent on Thursday, tracking the Fed hike.
On the other hand, biotech and semiconductor shares outperformed in both markets.
Analysts prefer China A-shares over Hong Kong shares for the rest of the year given they have more exposure to AI hardware and related supply chain.
Due to the consumer-facing nature of leading internet companies listed in Hong Kong, the city’s stocks are more susceptible to weak domestic consumption, they said.
A sustained and meaningful rebound in Hong Kong stocks requires catalysts such as fiscal stimulus or a “DeepSeek moment,” said Kevin Liu, chief offshore China and overseas strategist at CICC.
The smaller Shenzhen index was down 0.2 percent, the startup board ChiNext Composite index was weaker by 0.4 percent and Shanghai’s tech-focused STAR50 index was down 0.6 percent.