February 15, 2019 / 8:49 AM / 3 months ago

Hong Kong shares end lower on deflation, trade worries

* .HSI -1.9 pct, .HSCE -2.1 pct; both down for the week

* Deflation feared as producer prices drop for 7th straight month

* Bank loans data upbeat, but market nervous on trade talk outcome

HONG KONG, Feb 15 (Reuters) - The Hong Kong stock market closed lower on Friday on lacklustre China economic data, and as Chinese and U.S. officials remained locked in high-level talks, aimed at resolving the two countries’ trade dispute.

** At the close of trade, the Hang Seng index was down 1.9 percent at 27,900.84 points, while the Hang Seng China Enterprises index closed 2.1 percent weaker. Both indexes lost 0.2 percent on the week. ** The sub-index of the Hang Seng tracking energy shares ended 1.5 percent lower, the IT sector closed 2.7 percent weaker, the financial sector ended down 2.1 percent and the property sector shed 1.5 percent. ** China’s banks made the most new loans on record in January as policymakers try to jumpstart sluggish investment and prevent a sharper slowdown, according to official data. ** However, investors stayed focused on the Sino-U.S. trade dispute. The current round of high-level talks between the two countries are due to conclude later on Friday. ** The results of a meeting on Friday between U.S. Treasury Secretary Steve Mnuchin and China’s President Xi Jinping could be important for foreign exchange investors. ** China had pledged to make its industrial subsidy programs compliant with World Trade Organization rules and end those that distort markets, but had offered no details on how it intends to achieve that goal, sources briefed on the talks told Reuters. ** White House economic adviser Larry Kudlow said on Friday that Washington has not decided to extend the March 1 deadline, an idea floated by President Donald Trump this week. ** U.S. tariffs on $200 billion of imports from China could rise to 25 percent from 10 percent if China and the United States failed to reach a deal before the deadline. ** China’s factory-gate inflation slowed for a seventh straight month in January to its weakest pace since September 2016, official data on Friday showed, raising fears that deflation may return as domestic demand cools. ** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 1.2 percent, while Japan’s Nikkei index closed down 1.1 percent. ** The three biggest H-shares percentage decliners were ZhongAn Online P & C Insurance Co Ltd and Citic Securities Co Ltd, which closed 4.6 percent lower, followed by GF Securities Co Ltd, which ended down 4.5 percent. ** About 1.84 billion Hang Seng index shares were traded. The volume traded in the previous trading session was 1.48 billion. ** At close, China’s A-shares were trading at a premium of 17.43 percent over the Hong Kong-listed H-shares. (Reporting by Noah Sin, Editing by Sherry Jacob-Phillips)

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