China stocks edged lower on Friday morning, but are on track for its sixth consecutive weekly gain thanks to growing signs of a stabilising economy.
In Hong Kong, a bounce in the market was eclipsed by worries a U.S. rate hike next month and a strengthening dollar could divert money away from emerging markets, putting it on course for its fourth weekly loss.
The Shanghai Composite Index lost 0.3 percent, to 3,200.50 points by lunch break, and is up 0.1 for the week.
Barring further a slide in the afternoon, it would be the benchmark’s sixth straight weekly gain.
The blue-chip CSI300 index fell 0.2 percent, to 3,430.90 points. Both indexes were taking a breather as weeks of gains made some stocks look pricey.
The benchmark Hang Seng index added 0.3 percent, to 22,318.66 points, losing nearly 1 percent for the week. The Hong Kong China Enterprises Index gained 0.1 percent, to 9,339.29.
Global markets remain fixated on Donald Trump’s surprise U.S. election victory and what it means for international and domestic policies, with expectations a Trump administration will boost inflation and growth in the U.S. sending the dollar sharply higher.
Federal Reserve Chair Janet Yellen said on Thursday in Congressional testimony that the Fed could raise interest rates ‘relatively soon’.
“The market has pretty much priced in the U.S. interest rate rise in December,” said Linus Yip, strategist at First Shanghai Securities Ltd.
While there is concern higher U.S. rates could draw money out of emerging markets, the impact has been felt more in the Hong Kong stock market which is more exposed to global shifts in funds, while China’s relatively tight capital controls have helped temper any outflows.
That partly explains why investors in China’s stocks have shown resilience even as the yuan repeatedly hit 8-year lows this week. A raft of data showing a stabilizing economy has also helped avoid the kind of stocks meltdown seen last year.
The real estate sector was the winner, with the index tracking real estate up more than 2 percent as investors cheered data showing rising home prices in October despite local governments’ repeated effort to cool the frothy market.
The sector was also boosted by index heavyweight China Vanke Co Ltd, which jumped over 5 percent after its smaller peer China Evergrande Group said on late Thursday after market close that it had bolstered its stake in Vanke.
The gains in China’s stock market were capped by energy and transportation sectors, which pulled back from sharp rallies recently.
Most sector in Hong Kong rose, as gains in tech shares offset weakness in raw materials sector.