SHANGHAI — Hong Kong and China stocks fell on Thursday, as a two-day rally lost steam after fresh U.S. rate hike and rising COVID-19 cases in China hit fragile confidence.
** The Hang Seng index dropped 2.8% to 15,381.11 by the lunch break, wiping out Wednesday’s gains. The Hong Kong China Enterprises Index lost 3.1%.
** In China, the bluechip CSI300 index fell 1.2%, to 3,632.62, while the Shanghai Composite Index lost 0.6% to 2,984.43.
** Markets were broadly weak in Asia, tracking overnight Wall Street losses, after the U.S. Federal Reserve raised interest rates by three-quarters of a percentage point again.
** The Fed shifted the outlook on tightening from short and sharp to long and high, putting to rest any thought of a near-term pause, hitting sentiment.
** The market was not helped by a private-sector business survey showing China’s services activity contracted again in October amid fresh COVID outbreaks.
** In the latest fallout, electric vehicle maker NIO said it suspended production in the eastern city of Hefei amid rising COVID-19 cases and Yum China, operator of the KFC and Pizza Hut chains, said it was temporarily closing or reducing services at over 1,000 of its restaurants in China.
** China recorded 3,200 daily local COVID-19 cases for Nov. 2, the highest level in two and a half months, official data showed on Thursday.
** In Hong Kong, stocks fell across the board, as the city’s central bank raised rates following the Fed move.
** Most sectors fell in China too, but the tech-focused STAR Market rose 0.8%, while defense stocks remained buoyant. (Reporting by Shanghai Newsroom; Editing by Rashmi Aich)