China stocks edge lower, Hong Kong shares fall as global rate concerns weigh

Chinese mainland stocks edged lower on Wednesday, while Hong Kong equities declined as investors assessed rising global interest rate concerns, uncertainty surrounding oil markets and domestic efforts to stabilise financial markets.

At the midday break, the Shanghai Composite Index was down 0.2% at 3,654.95, while the blue-chip CSI300 Index slipped 0.3%.

Technology stocks showed some resilience, with the ChiNext Composite Index rising 1%, while Shanghai's technology-focused STAR50 Index was largely unchanged. The telecommunications sector was among the biggest gainers, with the CSI 5G Communications Index climbing 3% by midday.


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Optical communications module maker Zhongji Innolight advanced 8.3% during the morning session, reflecting selective buying in technology-related stocks.

In Hong Kong, the Hang Seng Index fell 0.8% to 24,352.69, while the Hang Seng Tech Index declined 1.4%, underperforming the broader market.

Across the region, equity markets remained confined to narrow trading ranges as investors weighed expectations of higher interest rates against persistent tensions in global oil markets.

Stronger-than-expected US consumer inflation data, coupled with hawkish signals from policymakers, fuelled expectations of a faster pace of interest rate hikes. The prospect of tighter monetary conditions has pushed global bond yields higher and strengthened the US dollar, creating additional pressure on emerging-market equities.

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The increase in global yields and the stronger dollar have weighed on valuations of mainland Chinese stocks, analysts at Nanhua Futures said in a note, according to Reuters.

The analysts noted that the recent recovery in Chinese equities had been driven largely by domestic market-support measures and a temporary easing of external uncertainties. However, they cautioned that the strength and sustainability of these factors remained limited.

Although investor sentiment has improved, market participants remain cautious, with Chinese stock indexes likely to trade within a range in the near term, the analysts said.

Meanwhile, oil prices rose on Wednesday after falling to two-month lows in the previous session. The market remained caught between hopes of de-escalation in the Iran war and concerns over continued attacks on shipping in the Strait of Hormuz.

Developments in energy markets and the outlook for global monetary policy are likely to remain key drivers of investor sentiment across Asian equities.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times.)