March 22, 2018 / 4:38 AM / a month ago

China, Hong Kong stocks drop on Fed rate hike, trade war concerns

* SSEC -0.8 pct, CSI300 -1.1 pct, HSI -0.6 pct

* HK->Shanghai Connect daily quota used 6 pct, Shanghai->HK daily quota used -2.1 pct

* FTSE China A50 -1.4 pct, BNY Mellon ADR China Select Index -1.4 pct

SHANGHAI, March 22 (Reuters) - Stocks in China and Hong Kong fell on Thursday as investors digested the impact of a rate hike by the U.S. Federal Reserve and as concerns over a potential trade war between the world’s largest and second-largest economies intensified.

** At 04:07 GMT, the Shanghai Composite index was down 0.81 percent at 3,254.31, while China’s blue-chip CSI300 index was 1.06 percent lower at 4,018.04. ** Chinese H-shares listed in Hong Kong fell 0.3 percent to 12,483.67, while the Hang Seng Index was down 0.63 percent at 31,218.05. ** The smaller Shenzhen index was down 0.23 percent and the start-up board ChiNext Composite index was higher by 0.11 percent.

** U.S. President Donald Trump will announce tariffs on Chinese imports on Thursday, a White House official said, in a move aimed at curbing theft of U.S. technology and likely to trigger retaliation from Beijing and stoke fears of a global trade war.

** There was no indication of the size and scope of the tariffs, which U.S. Trade Representative Robert Lighthizer said on Wednesday would target China’s high-technology sector and could also include restrictions on Chinese investments in the United States. Other sectors like apparel could also be hit.

** In response, China said it will actively take steps to safeguard its interests as well as those of its industries.

** “Taking trade restrictive measures will not only impede normal international trade order but also cause serious damage to the multilateral trade system,” Vice Commerce Minister Wang Shouwen said at a two-day World Trade Organization ministerial meeting that ended on Tuesday.

** Information technology stocks fell 2.9 percent in Hong Kong, while an index tracking their peers on the mainland were basically flat by the lunch break.

** Market participants also pondered the impact of the Fed’s rate hike on Wednesday.

** The U.S. Federal Reserve raised interest rates on Wednesday and forecast at least two more hikes for 2018, highlighting its growing confidence that tax cuts and government spending will boost the economy and inflation and spur more aggressive future tightening.

** China gingerly raised a key short-term interest rate on Thursday following the Fed’s move overnight, in a symbolic reminder that Beijing is keeping an eye on global market trends even as it cracks down on financial risks at home.

** “Today’s hike confirms that China’s hiking cycle will continue after the new PBoC Governor Yi Gang takes charge,” Betty Wang, senior China economist with ANZ Research, wrote in a note.

** “With intensive deleveraging efforts ongoing and a potential uptrend in CPI inflation, we expect China’s current monetary policy to continue its tightening bias under Yi’s leadership,” Wang added.

** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.05 percent, while Japan’s Nikkei index was up 0.49 percent. ** The yuan was quoted at 6.319 per U.S. dollar, 0.15 percent firmer than the previous close of 6.3284. ** The largest percentage gainers on the main Shanghai Composite index were Jiangsu Highhope International Group Corp up 10.09 percent, followed by Tian Jin Global Magnetic Card Co Ltd gaining 10.07 percent and Wenyi Suntech Co Ltd 10.02 percent higher. ** The largest percentage losers on the Shanghai index were China CSSC Holdings Ltd down 10 percent, followed by Antong Holdings Co Ltd losing 9.98 percent and CSSC Offshore & Marine Engineering Group Co Ltd down by 6.25 percent. ** The top gainers among H-shares were CITIC Securities Co Ltd up 2.73 percent, followed by PetroChina Co Ltd gaining 1.83 percent and Postal Savings Bank of China Co Ltd up by 1.64 percent. ** The three biggest H-shares percentage decliners were ZhongAn Online P & C Insurance Co Ltd which fell 4.65 percent, Air China Ltd which lost 3.3 percent and Tencent Holdings Ltd down by 3.1 percent. ** About 8.46 billion shares have been traded so far on the Shanghai exchange, roughly 47.9 percent of the market’s 30-day moving average of 17.68 billion shares a day. The volume traded was 16.84 billion as of the last full trading day. ** As of 04:07 GMT, China’s A-shares were trading at a premium of 25.81 percent over the Hong Kong-listed H-shares. ** The Shanghai stock index is below its 50-day and 200-day moving averages. ** The price-to-earnings ratio of the Shanghai index was 14.84 as of the last full trading day, while the dividend yield was 2 percent. ** So far this week, the market capitalisation of the Shanghai stock index has risen by 0.31 percent to 29.31 trillion yuan. ** In Hong Kong, the sub-index of the Hang Seng index tracking energy shares rose 0.8 percent, while the IT sector fell 2.8 percent. The top gainer on Hang Seng was PetroChina Co Ltd up 1.83 percent, while the biggest loser was Tencent Holdings Ltd which was down 3.11 percent.

Reporting by Samuel Shen, Luoyan Liu and John Ruwitch; Editing by Biju Dwarakanath

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