Hong Kong blue chip stocks ended little changed on Monday as investors eyed the prospect of another interest rate rise this week. Hong Kong's blue chip Hang Seng index closed up 0.04 percent, or 5.98 points, at 13,834.35, following last week's 0.45 percent fall. Turnover at HK$11.51 billion ($1.48 billion) was well below Friday's HK$17.2 billion. Traders said a 25 basis point increase in lending rates announced by major banks on Friday had already been well priced into the market, but investors remained cautious ahead of a meeting of the US Federal Reserve's rate-setting committee on Tuesday.
The Fed is widely expected to raise rates by another quarter percentage point at the meeting but Hong Kong dealers were divided over whether local banks would now follow.
Some investors were also concerned that higher oil prices could feed inflation fears, possibly encouraging the Fed to adopt a more aggressive credit tightening stance.
"It (the rate increase announced on Friday) removed a bit of uncertainty and it was good for the market overall," said Alex Tang, research director at Core Pacific Yamaichi.
"I don't expect to see a rate hike here to have much impact on the market in the longer run. The market is building up momentum backed up by a continued recovery in the Hong Kong economy and better-than-expected corporate earnings."
Traders said oil stocks remained a market favourite with oil prices near a record high. Many research houses have been upgrading earnings estimates for the sector.
Oil producer CNOOC Ltd rose 1.11 percent to HK$4.55, while PetroChina gained 2 percent to HK$5.10.
Hong Kong banks on Friday raised their best Hong Kong dollar lending rates by 25 basis points to 5.25 percent, effective on Monday, following the lead set by dominant lender HSBC Holdings Plc.
BOC Hong Kong (Holdings) Ltd, Hang Seng Bank, Bank of East Asia and Standard Chartered have all raised their lending rates.
However, highly geared, rate-sensitive property investment firms suffered some selling.
Great Eagle fell 4.2 percent to HK$17.20, New World Development was down 0.63 percent at HK$7.85 and Hysan Development eased 0.9 percent to HK$16.50.