December 14, 2016 / 4:26 AM / 2 years ago

Hong Kong stocks join cautious global gains ahead of Fed; China flat

* SSEC 0.1 pct, CSI300 -0.1 pct, HSI 0.6 pct

* Wall Street sets new highs overnight

* Investors await Fed’s decision to clear uncertainty

* Mainland regulator will soon announce new roles to curb insurers

SHANGHAI, Nov 14 (Reuters) - Hong Kong stocks advanced on Wednesday after Wall Street hit fresh record highs amid optimism about U.S. economic growth ahead of a widely expected interest rate hike by the Federal Reserve.

China stocks wobbled, however, and ended the morning session little changed after regulators vowed to tighten rules to restrict risky investments by insurers.

The Hang Seng index rose 0.6 percent to 22,581.41 points, while the Hong Kong China Enterprises Index gained 0.3 percent to 9,744.46.

The Federal Reserve is widely expected to raise rates later in the day.

Analysts say a hike of 25 basis points is priced in, but the markets will be focusing on the Fed’s statement and economic forecasts for clues on its thinking about further rate rises next year and how President-election Donald Trump’s policies may affect the outlook for growth and inflation.

Nearly all sectors in Hong Kong firmed, but shares of real estate developers were flat on concerns that higher borrowing costs would dampen demand for homes. The city’s interest rates typically follow those of the United States because its currency is pegged to the dollar.

The energy sector was the biggest gainer in both Hong Kong and China, boosted by expectations of a further rise in oil prices after OPEC and some non-OPEC oil producers agreed at the weekend to cut output.

In China, the CSI300 index fell 0.1 percent to 3,400.70, while the Shanghai Composite Index gained 0.1 percent.

Most sectors lost ground, with construction stocks leading the decline. But broader market weakness was partly countered by gains in banks and energy majors.

The chairman of China’s insurance regulator said on Tuesday that the country’s insurers should be long-term money providers and not short-term capital market “savages”, and regulators will strengthen on-site inspection, with a focus on short-term stock speculation.

Blue-chips in the mainland inched down on news that insurance regulator would soon announce new rules to tighten control over insurance companies’ stock market investment activities, in the latest move to curb insurers’ risky leverage buyout, local media Caixin reported late on Tuesday.

“Now the mainland markets were subdued by two factors, from inside and outside.” said Pan Shaochang, an analyst at Dongguan Securities, noting that regulator’s curb on insurers’ stock investment and yuan deprecation pressure fuelled by the Fed’s likely interest rate hike put the markets under pressure.

Pan said yield-hungry investors piled into bank shares for their high dividends and low valuations. A measure of mainland listed lenders rose over 0.8 percent at the midday, bucking the broad downward trend.

Reporting by Jackie Cai and John Ruwitch; Editing by Kim Coghill

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