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Hong Kong stocks start weaker after Fed rate hike; China shares flat

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[SHANGHAI] Hong Kong stocks opened lower on Thursday, led by property shares, after the Federal Reserve raised interest rates and unveiled plans for shrinking its balance sheet.

But China stocks appeared immune to the US rate move, which had been largely expected.

Hong Kong's benchmark Hang Seng index was down 0.8 per cent, at 25,676.08 points, with the decline led by the real estate sector, which is vulnerable to higher borrowing costs.

The CSI300 index dipped at the open but rose 0.1 per cent to 3,539.37 points at 0138 GMT, while the Shanghai Composite Index gained 0.1 per cent to 3,134.86 points.

The Fed lifted its benchmark lending rate by a quarter percentage point on Wednesday and said it would begin cutting its holdings of bonds and other securities this year, signalling its confidence in a growing US economy and strengthening job market.

The Hong Kong Monetary Authority on Thursday raised the base rate charged through its overnight discount window by 25 basis points to 1.50 per cent.

Hong Kong's central bank chief said he expects banks in the city to raise interest rates gradually and there could be an increase in capital outflows from the financial hub due to arbitrage trade with the local currency.