China stocks dip but Hong Kong gains as US rate hike fears ease

By Reuters/ Samuel Shen and Pete Sweeney   June 7, 2016 | 01:47 pm GMT+7
China stocks dip but Hong Kong gains as US rate hike fears ease
An investor looks at an electronic screen showing stock information at a brokerage house in Nanjing, Jiangsu Province, China, May 9, 2016. Photo by China Daily/via Reuters
China stocks edged lower on Tuesday, bucking gains in Hong Kong and other Asian markets amid diminishing expectations of U.S. interest rate hikes in coming months.

Both China's blue-chip CSI300 index and the Shanghai Composite Index lost 0.2 percent by the midday break, to 3,174.14 points and 2,929.79 points, respectively.

But Hong Kong shares rose, inspired by upbeat global markets, after U.S. Federal Reserve Chair Janet Yellen gave a largely upbeat assessment on the U.S. economic outlook, but gave few hints on when to increase interest rates.

To some investors, the absence of a time frame in Yellen's remarks on Monday remarks suggests the Fed will delay its next rate hike well beyond next week.

Wang Yi, strategist at Great Wall Securities, expected China's market to pick up eventually as the fears of an imminent U.S. rate hike recede and on hopes that Beijing will accelerate its long-promised reforms for bloated and inefficient state enterprises.

Investors also hope MSCI will decide next week to add some China "A" shares to its emerging market index.

China's finance minister Lou Jiwei said on Monday that the country has room to expand its 100 billion yuan ($15.23 billion) assistance plan for laid-off workers in industries hit by cuts in excess capacity, as Beijing pushes economic restructuring.

But Chinese investors were cautious on Tuesday, ahead of a as a flurry of economic data in coming weeks that will paint a clearer picture of the Chinese economy, and a long weekend which starts on Thursday.

Most sectors lost ground, with IT and materials among the biggest decliners.

FAW Car and FAW Xiali, both controlled by state-owned FAW Group, slumped for their second day, after the two automakers said they would postpone a restructuring plan aimed at eliminating conflicts of interests within the group. FAW Car slid 4 percent and FAW Xiali nearly 6 percent.

In Hong Kong, the Hang Seng index rose 0.8 percent to 21,198.09 points, while the Hong Kong China Enterprises Index gained 1.0 percent to 8,952.98.

Hong Kong-listed shares of HSBC rose 1 percent on news that the bank will restructure its global banking division to cut costs and make the business more "agile".

(Reporting by; Editing by Kim Coghill)

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