Hong Kong stocks were rocked by volatility on Friday with the benchmark teetering between positive and negative territory as nervous investors awaited more policy easing measures after the country’s central bank unexpectedly cut key benchmark rates this week.
The Hang Seng Index added 0.2 per cent to 17,033.91 at the noon trading break. Still, the benchmark is poised for a 2.3 per cent weekly loss, the second consecutive down week. The Hang Seng Tech Index gained 0.7 per cent, while the Shanghai Composite Index retreated 0.2 per cent.
E-commerce operator JD.com advanced 3.6 per cent to HK$102.90 and electric-vehicle maker BYD added 1.5 per cent to HK$237.80. Losers included China Unicom which sank 6.3 per cent to HK$6.68 and online travel agency Trip.com Group which lost 3.2 per cent to HK$336.80. Live-streaming commerce operator East Buy Holding tumbled 21 per cent to HK$9.80 after its top influencer left the company to start his own business.
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Investors now await a Politburo meeting, expected to be held later this month, for clues on how President Xi Jinping will fix the economic issues like a home sales slump and weak consumer spending.
“The economic fundamentals don’t lend too much support to the market and the key is to watch how the policy will change and how it will be implemented ,” said Song Yiwei, an analyst at Bohai Securities in Tianjin. “If the key Politburo meeting delivers signals of stabilising growth, there’s a chance that the market will continue to recover. Otherwise, trading and sentiment will be sluggish.”
The yield on China’s 10-year government bond dropped 1.4 basis points to 2.1955 per cent to a record low on Friday, as haven trades gained traction after the central bank unexpectedly cut both the policy interest rate and a short-term interest rate this week.
“The rate cuts this week suggest continued support to achieve 5 per cent real GDP growth in 2024, leading another round of policy easing,” Goldman Sachs said in a research note on Thursday. “We expect more policy easing to address concerns about weak domestic demand, especially on the fiscal and property fronts.”
Volatility from overseas markets has also weighed on sentiment, as the VIX index, or the so-called fear gauge, rose to its highest in three months overnight. Traders doubled down on bets the US Federal Reserve could cut interest rates in September, as data showed inflation pressures are subsiding despite a strong report on US economic growth.
Ugreen Group, which makes consume electronic products, surged 101 per cent from its initial public offering price to 42.70 yuan in Shenzhen on the first day of trading.
Other major Asian markets all rose. Japan’s Nikkei 225 climbed 0.2 per cent, while South Korea’s Kospi gained 0.7 per cent and Australia’s S&P/ASX 200 added 0.9 per cent.
More from South China Morning Post:
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