SHANGHAI: China stocks fell on Friday after benchmark lending rates were unexpectedly kept unchanged, but the main indexes were headed for their first weekly gain in a month as the US rate cut strengthened bets that Beijing will soon unveil fresh stimulus.
China stocks rebound as Fed rate relief lifts easing hopes
Hong Kong shares jumped more than 1%, on track for a sixth day of gains, and the best weekly performance in five months, amid a broad rally in global markets.
China’s blue-chip CSI300 index was down 0.27% at the midday break, while the Shanghai Composite index fell 0.23%. But both indexes were set for rare weekly rises.
Hong Kong’s Hang Seng Index gained 1.5%, on track for a weekly gain of more than 5%, as the Federal Reserve kicked off its rate-cutting cycle on Wednesday with a bigger than expected 50-basis-point cut.
Hong Kong stocks are more sensitive to US rates than shares in China, where regulators impose strict capital controls.
In China, sectors that benefit from lower rates – including real estate and tech rose. Banking shares also gained on China’s Friday inaction on rates. Lower lending rates hurt banks’ profitability.
The Fed starting to cut rates is good news for Chinese assets, but “whether the A-share market can stabilise is mainly determined by economic fundamentals,” China International Capital Corp said in a note.
Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.76% while Japan’s Nikkei index was up 1.80%.
China’s CSI financial sector sub-index was higher by 0.21%, the consumer staples sector down 0.64%, the real estate index up 1.33% and the healthcare sub-index fell 1.65%.
The smaller Shenzhen index was down 0.34%, the start-up board ChiNext Composite index was weaker by 0.8% and Shanghai’s tech-focused STAR50 index was down 0.95%.
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