Hong Kong stocks open lower on Monday as investors absorb Federal Reserve Chair Jerome Powell’s hawkish message that interest rates are going higher for longer in a painful fight against inflation.
The benchmark Hang Seng Index opened down 1.04% to drop below 20,000 mark, the Hang Seng China Enterprises Index down 1.07% and the Hang Seng Tech Index down 1.24%.
Hong Kong-stocks of US-listed Chinese companies are mostly higher after regulators in China and the US last Friday signed an audit supervision cooperation agreement, easing delisting risks for Chinese firms listed in US stock markets.
Biotech companies, solar power companies, mobile phone component supplies, shipping companies, non-ferrous metal companies are leading the losses, while paper producers, sportswear makers and some Hong Kong property developers are rising.
Chinese A-shares open lower on Monday, with the benchmark Shanghai Composite Index down 1.02%, the Shenzhen Component Index down 1.23% and the tech-heavy Chinext Price index down 1.53%.
Solar power companies, shipping companies, semiconductor companies and non-ferrous metal companies are leading the losses. Oil companies and agricultural companies are outperforming, trading slightly higher.
Jay Powell said on Friday that the Federal Reserve “must keep at it until the job is done” as he used a speech at Jackson Hole to deliver his most hawkish message to date on the US central bank’s determination to tame surging inflation by hiking interest rates. Successfully reducing inflation would probably result in lower economic growth for “a sustained period” and interest rates would need to stay at a level that restrains growth “for some time”, he warned.
Powell predicted there would “very likely be some softening of labour market conditions” and “some pain” for households and businesses. “A failure to restore price stability would mean far greater pain,” he added.
The US stock market slid sharply after Powell spoke, with the benchmark S&P 500 index falling 3.4%, while the tech-heavy Nasdaq Composite tumbled 3.9%. It was the biggest one-day decline for both indices since mid-June.