Hong Kong slipped while China stocks were flat at midday on Wednesday in volatile trade.
Trump’s Choice Of China Hawks In His Cabinet
Investors continued to digest U.S. President-elect Donald Trump’s plans to appoint China hawks to key cabinet positions.
Impact On The Market
Hong Kong’s Hang Seng benchmark fell 0.6% by the noon break to a seven-week low.
China’s blue-chip CSI 300 edged up 0.1% after losing as much as 0.6%, and the Shanghai Composite was little changed.
The Golden Dragon China Index tumbled 4.5% overnight in New York.
Marco Rubio, who has harshly criticised China, is likely to become Secretary of State, while Mike Waltz has been named National Security Adviser.
What Are Investors Paying Attention To?
“Investors are now focused on Trump’s cabinet picks to gauge whether his China policy will be more hawkish than during his first term,” said Jason Chan, senior investment strategist at Bank of East Asia.
“Short-term sentiment on China is likely to remain weak amid uncertainties around him.”
The Hang Seng benchmark has declined nearly 15% since the October peak to a seven-week low, poised to erase all gains made since Beijing unveiled a major stimulus package in late September.
Investors Are Disappointed
While the government has announced further support measures since then, investors have found them to be disappointing.
Mainland property developers led the fall in Hong Kong on Wednesday, with a sub-index tracking the sector down 2.3%.
CSI Energy added 1%, lifting onshore markets higher.
The mood onshore was also aided by Nomura bumping up its China growth forecast.
Nomura cited some signs that economic activity may be picking up.
Growth Forecast
Nomura’s growth forecast for the fourth quarter was revised up to 4.9% year-on-year 4.4%, while the annual GDP growth forecast was revised to 4.8% from 4.7%, analysts at the Japanese broker said in a note.
However, it kept its 2025 forecast at 4.0%.
The yuan bounced off a more than three-month low against the dollar on Wednesday, lifted by firmer-than-expected official midpoint guidance.
