July 19, 2019 / 4:50 AM / 4 months ago

China, HK stocks track Asian market rally on U.S. rate-cut optimism

SHANGHAI, July 19 (Reuters) - China and Hong Kong stocks followed Asian shares higher on Friday, after a comment from top Federal Reserve official cemented expectations of a U.S. interest rate cut later this month, fuelling risk appetite.

** Investor sentiment was also aided by reports that Sino-U.S. trade talks have resumed, as well as on news that China is considering broadening an inbound investment channel by foreign investors.

** The CSI300 index rose 1.3% to 3,815.95 points at the end of the morning session, while the Shanghai Composite Index gained 1% to 2,930.58 points.

** The Hang Seng index added 1.1% to 28,772.46 points, while the Hong Kong China Enterprises Index gained 1.4% to 10,929.72.

** New York Fed President John Williams said on Thursday that policymakers could not wait for an economic disaster to hit before adding stimulus, in a speech read as a strong argument in favour of quick monetary action. ** The comments by Williams made it a virtual certainty the U.S. Fed would cut interest rates by 25 basis points at its July 30-31 policy meeting and also fuelled expectations of an even deeper 50 basis point reduction.

** Markets gained after U.S. and Chinese officials spoke by telephone on Thursday as the world’s two largest economies seek to end a year-long trade war. U.S. Treasury Secretary Steven Mnuchin suggested in-person talks could follow.

** Meanwhile, mood in mainland market was lifted after China’s foreign exchange regulator said it was considering increasing or even scrapping quotas under cross-border investment scheme QFII.

** China’s CSI300 financial sector sub-index gained 1.7%, the consumer staples sector up 1.3%, the real estate index rose 3.12% and the healthcare sub-index climbed 0.34%. ** Chinese H-shares listed in Hong Kong rose 1.35% at 10,929.72, while the Hang Seng Index was up 1.09% at 28,772.46. ** The smaller Shenzhen index rose 1.16% and the start-up board ChiNext Composite index traded higher by 1.19%. ** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 1.01%, while Japan’s Nikkei index rose 1.94%. ** The yuan was quoted at 6.8736 per U.S. dollar, 0.1% firmer than the previous close of 6.8805. ** The largest percentage gainers in the main Shanghai Composite index were Taiyuan Chemical Industry Co Ltd, up 10.04%, followed by Beijing Jingcheng Machinery Electric Co Ltd , gaining 9.94% and Sichuan Western Resources Holding Co Ltd, up by 9.94%. ** The largest percentage losses in the Shanghai index were China Satellite Communications Co Ltd, down 5.43%, followed by Guangdong Ellington Electronics Technology Co Ltd , losing 5.39% and Aerospace Communications Holdings Co Ltd, down by 5.34%.

Reporting by Samuel Shen and John Ruwitch, Editing by Sherry Jacob-Phillips

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