China and Hong Kong stocks tracked regional markets higher on improved risk appetite after the U.S. Federal Reserve raised rates in a widely expected move, although it dampened expectations of more aggressive tightening ahead.
China and Hong Kong stocks tracked regional markets higher on improved risk appetite after the U.S. Federal Reserve raised rates in a widely expected move, although it dampened expectations of more aggressive tightening ahead. The CSI300 index rose 0.4 percent, to 3,477.94 points by the lunch break on Thursday, while the Shanghai Composite Index gained 0.7 percent, to 3,263.08 points.
The Hang Seng index added 1.3 percent, to 24,104.06 points, while the Hong Kong China Enterprises Index gained 1.7 percent, to 10,442.55. The Fed raised its benchmark policy rate by 25 basis points, which had been largely factored into markets, traders said.
Meanwhile, Fed policymakers still projected a total of three rate increases this year, defying predictions from some analysts that it would release a more aggressive set of rate-raising forecasts.
Hong Kong’s central bank raised its benchmark interest rate while China’s central bank lifted short-term interest rates after the U.S. rate hike.
Chi Lo, economist at BNP Paribas Investment Partners, said that the Fed’s 25 bp hike should have a limited impact on Chinese interest rates or capital outflows, which have already shown signs of abating.
Watch this also:
“From a sectoral perspective, the revival of PPI inflation bodes well for the earnings growth of upstream industrial and big cap stocks, such as energy-related, metal, chemical and heavy industrial companies,” he wrote.
“But downstream companies do not enjoy the same benefit due to the lack of pass-through of PPI inflation to CPI inflation.” Most sectors rose in China and Hong Kong.
Shares in sub-indexes of banking and property companies in Hong Kong jumped more than 1 percent on the benign economic outlook and the continued steady path of rate rises signalled by the U.S. central bank. Energy shares in Hong Kong jumped 2.7 percent.