Hong Kong and mainland stocks dipped in early Thursday trading, tracking losses in the region and overnight US markets, with traders disappointed by the Federal Reserve‘s take on the economic recovery outlook.
The Heng Seng Index slipped 0.2 per cent to 24,676.41 as of 10.15am local time, while the Shanghai Composite Index also retreated by the same margin to 3,277.32.
While the Fed pledged its policy would remain accommodative, it also observed that the pace of economic activity is likely to slow and added that additional stimulus spending may be needed to support gains in the US job market.
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“With the markets less dovish take on the Fed when combined with Chair Jerome Powell‘s clouded economic viewfinder as seen through Congress’s non-reactive fiscal lens, it certainly proved to demoralise investors,” said Stephen Innes, a strategist at AxiCorp. “There simply was not enough dovish medicine in the FOMC (Federal Open Market Committee) cure-all policy to sweep away the September blues.”
Top losers included Wuxi Biologics, Techtronic Industries and Xiaomi Corp, while Sunny Optical and MTR Corp led gainers.
Losses in local markets were however limited as the Hong Kong Monetary Authority on Thursday disclosed about HK$130 billion (US$16.8 billion) in net inflows of funds into the Hong Kong dollar since April. The liquidity was likely tied to investors vying for a slice of large-sized stock offerings in the city in recent months.
“Many investors would like to hold more cash to chase [the impending] initial public offering (IPO) by Ant Group as they believe the fintech giant could generate lofty returns upon trading debuts,” said Zhou Ling, a hedge fund manager with Shanghai Shiva Investment. “Performance of the A-share market is expected to be weak for the coming two weeks.”
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Notwithstanding that, four new stocks soared on their debuts, buoyed by investors’ belief that they were undervalued based on the offering prices. Economic data in recent days are also pointing to nice traction in China’s post-pandemic recovery, including industrial production and retail sales.
Shenzhen XFH Technology, a materials company whose products include graphite anode and lithium ions used in electric-vehicle battery packs, soared nearly fivefold to 70 yuan (US$10.37). Winner Medical, a Shenzhen-based manufacturer and distributor of health care supplies, more than doubled its IPO price to 125 yuan.
Guangdong Huiyun Titanium Industry, a producer of specialty chemicals including titanium dioxide use in anti-ultraviolet ray sunscreens, opened at 24 yuan versus its offer prices of 3.64 yuan. Shanxi Huaxiang Group, which makes machinery parts such as crankshafts, cylinders, pistons, and flanges, jumped by its daily 44 per cent daily limit to 11.62 yuan, compared with its offer price of 7.82 yuan in Shanghai.
Additional reporting by Zhang Shidong
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