Hong Kong Market falls 0.55%

Headline indices of the Hong Kong share market closed down on Thursday, 27 September 2018, on tracking soft lead from offshore market overnight and weaker trade on Mainland A-share market and other Asian market today. Shares of banks and financials rose but realty stocks declined after HSBC had lifted its lending rate for the first time in 12 years after a hike by the city's de facto central bank. At closing bell, the Hang Seng Index dropped 153.59 points or 0.55% to 27,663.28. The Hang Seng China Enterprises Index shed 68.83 points or 0.63% to 10,916.77. The sub-index of the Hang Seng tracking the Commerce & Industry sector fell 1.1%, properties sector dropped 0.9%, and financial sector was 0.1% down, but Utilities sector climbed 0.1%.

Shares of banks and financials players were mostly higher after HSBC's announcement that it will raise its prime lending rate for the first time in a decade. The move by HSBC, which was swiftly followed by Standard Chartered and Hang Seng Bank, took its cue from the US Federal Reserve and the Hong Kong Monetary Authority. The key rate was lifted by 12.5 basis points to 5.125%, HSBC said in a statement. Standard Chartered and Hang Seng Bank said later on Thursday morning that they would increase their best lending rates by the same amount, to 5.375 per cent and 5.125 per cent respectively. The decision came after the Hong Kong Monetary Authority -- the city's de facto central bank -- lifted its borrowing costs following an increase by the US Federal Reserve. The HKMA is required to lift rates in line with the Fed owing to the dollar peg. The Federal Reserve raised the benchmark interest rate on Wednesday for the third time this year in a widely anticipated decision, citing the strong US economy and jobs market. The HKMA raised interest rates to 2.5%.

Among HK lenders, HSBC edged up 0.1 per cent to HK$69.70, Hang Seng Bank climbed 2.2 per cent to HK$213 and Chong Hing Bank added 0.4 per cent to HK$14.20. Ping An Insurance (Group) gained 0.1 per cent to HK$79.25.

Shares in realty companies were, however, down on news of rate hikes by banks.

OFFSHORE MARKET NEWS, US stock market closed down on Wednesday, after the Federal Reserve raised interest rates. The Fed raised its target overnight rate by 25-basis points to a range of 2% to 2.25%, up from 1.75% to 2%. The statement said the Fed still foresees another rate hike in December, three more next year, and one increase in 2020. The Dow Jones Industrial Average fell 106.93 points or 0.4% to 26,385.28, the Nasdaq dipped 17.10 points or 0.2% to 7,990.37 and the S&P 500 fell 9.59 points or 0.3% to 2,905.97.

The major European markets ended higher on Wednesday. The German DAX Index and the U.K.'s FTSE 100 Index both inched up by 0.1%, while the French CAC 40 Index climbed by 0.6%.

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