China stocks edged lower on Thursday morning, weighed down by the commodity sector, with investor risk appetite also curbed by strength in the U.S. dollar and worries over capital outflows.
Hong Kong stocks pared early losses and ended the morning session roughly flat, with strength in the services and utilities sectors offsetting weakness in tech stocks.
China’s blue-chip CSI300 index fell 0.2 percent, to 3,422.32 points at the end of the morning session, while the Shanghai Composite Index lost 0.3 percent, to 3,195.26 points.
Both the Hang Seng index and the Hong Kong China Enterprises Index dipped 0.1 percent, to 22,253.34 and 9,355.75 points, respectively.
China’s yuan firmed against the U.S. dollar on Thursday after the People’s Bank of China set a weaker midpoint for the 10th consecutive day.
With the dollar index still hovering near a 13-1/2-year high against a basket of currencies, there are persistent fears of yuan depreciation, as global investors continue to bet U.S. President-elect Donald Trump’s fiscal stimulus and tightening monetary policies will result in higher inflation and stronger U.S. economic growth.
“China’s markets were dampened as coal and metal, which boosted markets earlier, gave up some of their recent sharp gains,” said Zhang Yanbin, an analyst at Zheshang Securities, adding that markets are likely to hover near 3,200 points before rising up.
He pointed out that the future performance of energy and raw material shares was subject to Trump’s commitment to boost spending.
Most sectors in China lost ground, with information technology leading the decline.
Gree Electric Appliances, China’s largest air conditioner manufacturer, jumped to nearly 4 percent after the company scrapped plans to acquire a lithium battery producer.
An index tracking Hong Kong-listed technology firms lost more than 1 percent in early trading, weighed by heavyweight Tencent Holdings Ltd which dropped over 1 percent on worse-than-expected third quarter results released after the market close on Wednesday.