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China stocks rise; HK shares fall after rate hike

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SHANGHAI — China stocks rose on Thursday, buoyed by low market rates in the country amid tightening monetary policies worldwide, while Hong Kong shares dropped after the city’s central bank raised its base rate by 75 basis points.

** China’s blue-chip CSI300 Index and the Shanghai Composite Index both gained 0.6%.

** Hong Kong’s benchmark Hang Seng index dropped 0.4%.

** As expected, the U.S. Federal Reserve raised rates by 75 basis points to 2.25-2.5% but did note some softening in recent data.

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** “The less hawkish-than-expected comments could portend to a near-term softening of the USD and risk assets could rally,” wrote David Chao, global market strategist, Asia Pacific (ex-Japan) at Invesco.

** China is relatively immune to global capital flows due to its capital control, as its short-term interbank rates hover around 1-1/2-year lows.

** Investors are more focused on domestic policies, especially ahead of the politically significant 20th Communist Party Congress later this year.

** China must focus on addressing “unbalanced and inadequate development” in the next five years, President Xi Jinping told senior leaders this week, State broadcaster CCTV reported late on Wednesday.

** Most sectors rose in China. Bucking the trend, the CSI300 Real Estate Index lost 1.7%.

** The Financial Times reported that Beijing was seeking to mobilize up to 1 trillion yuan ($148 billion) of loans for stalled property developments, in its most ambitious attempt to revive the debt-stricken sector.

** In Hong Kong, property and financial shares fell.

** Eddie Yue, chief executive of the Hong Kong Monetary Authority (HKMA), said he expected the city’s overnight and one-month interbank rates, as well as short-term rates, to accelerate at a much faster pace. (Reporting by Shanghai Newsroom)

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