November 9, 2018 / 9:07 AM / a year ago

HK stocks snap 3 sessions of gains; Fed rate hike fears grow

* HSI falls 2.4 pct, HSCE declines 2.5 pct

* IT stocks drop over 4 pct; energy, financials under pressure

By Noah Sin

HONG KONG, Nov 9 (Reuters) - Hong Kong stocks fell across the board on Friday and erased gains made in the previous three sessions, tracking weakness in broader Asian markets amid growing worries that the U.S. Federal Reserve looked set to deliver another rate hike in December. ** The Hang Seng index declined 2.4 percent to 25,601.92. The Hang Seng China Enterprises index fell 2.5 percent to 10,431.46. ** The Hang Seng lost 3.3 percent for the week, returning to levels not seen since Nov. 1. ** Losses were notable in the tech sector, as the Hang Seng sub index for information technology companies slid by over 4 percent. ** The fall was made worse by Tencent Holdings and circuits maker Semiconductor Manufacturing International Corp . Brokerages cut target prices for both stocks. Tencent closed down 4.9 percent, making it the worst performer on the index. ** Chinese financial companies, under pressure by the banking and insurance watchdog to lend more to struggling private enterprises, weighed on the Hang Seng sub-index for the financial sector, which closed down 2 percent. Property stocks also dipped 2.3 percent. ** With oil prices in bear territory, the energy sector in Hong Kong <.HSCIE > also came under pressure, shedding 2.6 percent on Friday. ** Patrick Yiu, managing director at Hong Kong-based CASH Asset Management, blamed global investors’ concerns over a Fed rate hike in December as the culprit for the drop in local stocks. ** “The Fed didn’t sound very hawkish last night, but the market reaction was hawkish,” said Yiu. “Imagine what would happen if the Fed started sounding hawkish next month.” ** The Fed held interest rates steady on Thursday but remained on track to continue gradually raising borrowing costs, pointing to healthy economic prospects that were marred only by a dip in the growth of business investment. ** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 1.4 percent, while Japan’s Nikkei index closed down 1.1 percent. ** More downward pressure could be in store for Hong Kong equities, if the short-term U.S. treasury yield curve draws closer to inversion, Yiu added. ** The yuan was quoted at 6.9443 per U.S. dollar at 08:30 GMT, 0.15 percent weaker than the previous close of 6.934. ** The three biggest H-shares percentage losers were Guangzhou Automobile Group Co Ltd, which was down 6.1 percent, China Merchants Bank Co Ltd, which fell 5.8 percent, and China Vanke Co Ltd, down by 5.1 percent. ** At close, China’s A-shares were trading at a premium of 17.8 percent over the Hong Kong-listed H-shares.

Reporting by Noah Sin; Editing by Subhranshu Sahu

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