Hong Kong stocks closed 0.85 percent lower Thursday, giving up most of the previous day's gains, after the US Federal Reserve suggested an eventual interest rate hike tipped for late next year could be more than forecast. The Hang Seng Index shed 207.69 points to 24,168.72 on turnover of HK$70.20 billion ($9.06 billion). The index rallied one percent on Wednesday on a report that China's central bank had pumped $81 billion into the country's top five lenders in a bid to boost the struggling economy.
The Fed said it would stick to its steady-as-she-goes policy on interest rates, keeping them at a record low despite growing calls for a rise as the economy strengthens. Its head, Janet Yellen, continued with her line that there remains too much slack in the jobs market. But the bank also suggested that when rates eventually increase - probably in the back end of 2015 - they could be higher than initially estimated.
Wall Street cheered the prospect of six or more months of easy money. The Dow rose 0.15 percent to a new record, the S&P 500 gained 0.13 percent to end just short of its own all-time high and the Nasdaq edged up 0.21 percent. A fall in house prices in China also hit property developers and banks. "China produced another set of disappointing data, with property prices for August even worse than the woeful July reading," brokerage IG said, according to Dow Jones Newswires.
Sino Land was 2.11 percent off at HK$12.98 and Henderson Land Development slipped 1.07 percent to HK$55.65, while Hang Seng Bank dipped 0.46 percent to HK$129.90 and HSBC was 0.12 percent lower at HK$82.80. Internet firm Tencent fell 1.21 percent to HK$122.5, China Mobile shed 1.2 percent to end at HK$94.65 and Sinopec slipped 1.81 percent to HK$7.04. In China the benchmark Shanghai Composite Index rose 0.35 percent, or 8.04 points, to 2,315.93 on turnover of 144.5 billion yuan ($23.5 billion).
The Shenzhen Composite Index, which tracks stocks on China's second exchange, gained 0.64 percent, or 8.09 points, to 1,279.43 on turnover of 156.7 billion yuan. Dealers were lifted by hopes for government policies to support the economy but new share issues diverted buying interest, dealers said. "The market still has expectations for future economic policies," Central China Securities analyst Zhang Gang told AFP. "Hopes of China deepening its reforms and easing policies should maintain the uptrend in the medium term, but new share issues will likely freeze large sums of funds and affect market performance in the near term," Zhang said.
Two companies started offering shares for subscription by investors Thursday ahead of listing, while 12 more initial public offerings will follow next week. Shanghai Construction gained 3.71 percent to 5.03 yuan, while Shanghai Jinqiao Export Processing Zone Development rose 1.20 percent to 12.66 yuan. Shenzhen-listed China Haisum Engineering soared by its 10 percent daily limit to 14.10 yuan.