China, HK stocks fall as rate cut, Blinken visit disappoint

CHINA and Hong Kong stocks fell on Tuesday (Jun 20), dragged by property and tech shares after the country cut benchmark lending rates less than expected, and Antony Blinken’s Beijing visit signalled little improvement in Sino-US ties.

The Shanghai Composite Index slipped 0.5 per cent, while the blue-chip CSI300 Index dipped 0.2 per cent. Hong Kong benchmark Hang Seng lost 1.5 per cent in its worst day in nearly three weeks.

China cut its key lending benchmarks on Tuesday to shore up a slowing economic recovery, but the easing was below market expectations.

Both the one-year, and five-year loan prime rates (LPRs) were lowered by 10 basis points, though many had anticipated a bigger cut to the five-year rate on which mortgage rates are based.

“Such marginal easing will probably help prevent growth from slowing sharply, but is unlikely to offer a strong boost to reverse the growth slippage in the near future,” analysts at BofA global research said in a note.

The Hang Seng Mainland Property Index tumbled 3.8 per cent, the biggest one-day drop in a month. An index tracking China-listed developers slid 1.9 per cent.

The market was also disappointed by the lack of breakthroughs during a rare visit to Beijing by US Secretary of State Blinken. In that visit, China and the US only agreed to try and stabilise their intense rivalry to avoid veering into conflict.

“China and the US didn’t reach consensus on any major issues during the meeting,” Chinese political commentator Lu Kewen wrote. “There’s also relatively big discrepancy in the direction of Sino-US relationship.”

Technology shares, caught in the crossfire of Sino-US competition, fell. The Hang Seng Tech Index fell the most in six weeks, down 2.5 per cent. Bucking the trend, and highlighting lingering geopolitical tensions, the CSI defence Index jumped 3.6 per cent.

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China’s tourism shares and hotel operators also fell, despite the upcoming Dragon Boat Festival that starts on Thursday, reflecting weak consumer confidence. REUTERS