Hong Kong stocks fall as US blacklist concerns outweigh Wall St gains

Hong Kong stocks opened lower on Thursday and Chinese stocks were flat despite gains on Wall Street overnight as investors worried that Washington might blacklist more Chinese companies.

Hong Kong’s Hang Seng index opened 0.6 lower while China’s CSI 300 was little changed in early trading after the Financial Times reported on Wednesday that the US would add eight Chinese companies to its investment blacklist for their alleged involvement in the surveillance of the country’s Uyghur Muslim minority.

Joe Biden’s administration is also expected to place some Chinese biotech companies on its “entity list”, which bars US companies from exporting technology to the groups from America without a licence.

Dawning Information Industry, a tech company that is expected to be added to the list, dropped as much as 1 per cent in morning trading, while Sino Biopharmaceutical opened 1.1 lower, continuing its decline after dropping significantly on Wednesday.

Stocks of other companies expected to be added to the list rose on Thursday. NetPosa Technologies jumped as much as 6.3 per cent, while Xiamen Meiya Pico added as much as 3 per cent.

Wuxi Biologics, whose shares plunged almost 20 per cent on Wednesday amid fears it would be included on the entity list, advanced as much as 9.4 per cent in morning tradomg after the company said it might repurchase up to $500m worth of shares.

Stocks elsewhere in the Asia-Pacific region were stronger on positive sentiment in the US after the Federal Reserve signalled that it would begin cracking down on inflation. Japan’s Topix and Nikkei 225 gained as much as 1.5 and 2.1 per cent, respectively, while South Korea’s Kospi was up as much as 1 per cent.

In commodity markets, Brent crude contracts for February delivery rose more than 1 per cent to about $74 a barrel. Gold also edged up 0.3 per cent.

Wall Street futures rose while the yield on the US 10-year Treasury note was unchanged at 1.46 per cent.

US stocks rose sharply on Wednesday afternoon after the Fed unveiled hawkish interest rate forecasts and a plan to accelerate the pace at which it would wind down the crisis policy measures that have supported financial markets throughout the coronavirus pandemic.

Wall Street’s benchmark S&P 500 index, which had slipped about 0.2 per cent earlier in the day, swung to a 1.6 per cent gain, closing at its second-highest level on record. The tech-heavy Nasdaq Composite also erased its 0.7 per cent decline to trade up 2.2 per cent for the day.

Fed officials said they expected to raise US interest rates three times in 2022, having previously been evenly split on the prospects of a lift-off in rates next year.

The central bank also said it would double the pace at which it would “taper”, or withdraw, its huge bond-buying programme, cutting purchases by $30bn a month starting in January.

Analysts said the optimism in US equities suggested that investors were relieved to have clarity on the Fed’s plans and did not expect them to significantly affect the wider recovery in stock prices from the pandemic.