Hong Kong Market falls 0.6%

Hong Kong share market finished session deeply in negative territory on Monday, 22 August 2022, on following the broadly negative cues from Wall Street on Friday, amid renewed fears of interest rate hikes following hawkish comments from US Federal Reserve officials. Also, weighing the market sentiments was worsening COvid-19 outbreaks and a looming energy crisis.

However, market losses capped as some investors bought back after China's central bank trimmed its key rates in an attempt to boost the world's second-largest economy.

At closing bell, the benchmark Hang Seng Index fell by 116.05 points, or 0.59%, to 19,656.98. The Hang Seng China Enterprises Index dropped by 24.59 points, or 0.37%, to 6,695.29.

With an annual meeting of central bankers in Jackson Hole, Wyoming, coming up this week, investors opted sideline for U.S. Federal Reserve Chair Jerome Powell's speech at the Jackson Hole central for clues regarding future rate hikes, after Fed speakers made comments indicated a slowdown in rate hikes may not be forthcoming after all. Last week, St. Louis Federal Reserve President James Bullard reiterated his calls for another 0.75 percentage point hike, while San Francisco Fed chief Mary Daly said that raising rates by 50 or 75 basis points in September would be reasonable.

Covid-19 cases in China jumped to a three-month high over the weekend. The country is also experiencing its worst heatwave in six decades, as authorities in the manufacturing hub of Sichuan warned of severe power shortages on Sunday.

The People's Bank of China cut its benchmark lending rate and lowered the mortgage reference on Monday, adding to last week's easing measures, to revive an economy hobbled by a property crisis and pandemic woes.

The one-year loan prime rate was lowered by 5 basis points to 3.65% at the central bank's monthly fixing, while the five-year LPR was slashed by 15 basis points to 4.3%. The one-year LPR was last reduced in January. The five-year tenor, which was last lowered in May, influences the pricing of home mortgages. Most home mortgages are linked to the 5Y loan prime rate. So this rate cut is obviously to reduce the burden on borrowers.

Among blue chips, Tencent fell 1.4% to HK$310.60 and HSBC lost 2.1% to HK$49.30. ENN Energy tumbled 14% to HK$103.50, while Geely Automobile and BYD slipped 0.5 to 1%.

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