June 3, 2016 / 5:01 AM / 2 years ago

Shanghai stocks set to break 6-week losing streak; Hong Kong edges up

* CSI300: +0.2 pct; SSEC: flat; HSI: 0.3 pct

* Investors closely watch U.S. monetary policy, Brexit

* Shanghai index poised to break six-week losing streak

SHANGHAI, June 3 (Reuters) - Shanghai stocks looked set to snap a six-week losing streak on Friday, helped by growing expectations that MSCI will add Chinese shares to its index later this month and revive foreign interest in the struggling mainland market.

But gains were capped on Friday by worries about the slowing economy and downward pressure on the yuan currency.

Investors in Hong Kong have also been cautious, as they remain fixated on the possibility of a U.S. rate hike as early as this month or next, while anxiously awaiting Britain’s referendum on June 23 on whether to remain in the European Union.

China’s blue-chip CSI300 index rose 0.2 percent to 3,174.83 points by lunch break, while the Shanghai Composite Index was unchanged at 2,924.53 points.

Both indexes looked set to rise roughly 3.7 percent for the week.

Hong Kong stocks edged up slightly, with the Hang Seng index and the Hong Kong China Enterprises Index both up 0.3 percent.

“‘To hike or not to hike’ has been the mantra of global financial markets even before the first rate hike last December. It’s fair to say that the mantra will carry on well beyond the second rate hike, be it in June, July or September,” wrote Bernard Aw, strategist at IG Group.

Investors are awaiting a raft of China May data next week for clues on whether the economy is stabilising. March data was encouraging, but April indicators and May business activity surveys have painted a weaker picture.

While fears of a hard economic landing have ebbed, many analysts see no quick rebound, either, while systemic risks such as growing debt levels and bad loans appear to be on the rise.

Growing expectations of a looming U.S. rate hike and the resulting boost to the U.S. dollar have also revived fears of more depreciation pressure for China’s currency. Analysts polled by Reuters expect the yuan weaken around 2.5 percent over the coming year against the greenback.

Such bearish views on the yuan has led to investors piling up bets against the Chinese currency with a variety of creative strategies, raising the risk of a fresh bout of yuan volatility that churned global markets just a few months ago.

That could in turn spark fears of a resurgence in capital outflows, creating a vicious cycle for Chinese assets.

But the stock market was relatively calm on Friday, with mixed performance seen in various sectors. Consumer and healthcare sectors rose sharply, but energy and material shares fell.

In Hong Kong, most sectors were up, but an index trading IT shares fell over 1 percent.

Reporting by Samuel Shen and Pete Sweeney; Editing by Kim Coghill

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below