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China Stocks Tumble on Rate Hike Fears
11 Sep
Summary
- Chinese and Hong Kong stocks declined, heading for weekly losses.
- Rising US interest rate expectations weakened investor sentiment.
- Shanghai Enflame Technology surged 200% in its market debut.
Chinese and Hong Kong stock markets faced declines on Friday, with the CSI300 and Hang Seng indexes trending towards weekly losses. Trading volumes were thin, liquidity tightened, and anticipation of further US interest rate hikes negatively impacted investor sentiment. Mainland metal stocks led the market downturn, while oil shares saw gains due to rising crude prices.
The CSI300 index fell 1.6% by the lunch break, and the Hang Seng declined nearly 1%. For the week, the CSI300 was down 1.6%, and the Hang Seng had lost 3.5%. Market sentiment in mainland China weakened over the past month as investors took profits after a rally earlier this year, exacerbated by daily onshore equity turnover hovering near its lowest level this year.
Growing expectations of another US Federal Reserve interest rate hike, driven by August's producer price increases, pressured investor sentiment. This, combined with weaker liquidity and fading momentum in Chinese equities, reduced risk appetite across regional markets. Despite the overall market weakness, Shanghai Enflame Technology, an AI chipmaker backed by Tencent, surged about 200% in its Shanghai debut on Friday, raising 6.12 billion yuan.
