China, Hong Kong stocks fall after Fed's surprise turn

Reuters2021-06-21

* SSEC -0.2%, CSI300 -0.6%, HSI -1.4%

* HK->Shanghai Connect daily quota used -1.7%, Shanghai->HK daily quota used 0.5%

* FTSE China A50 -1.1%

SHANGHAI, June 21 (Reuters) - China and Hong Kong stocks fell on Monday, tracking other Asian markets, as investors continued to ponder the implications of the U.S. Federal Reserve's surprise hawkish shift last week.

** The CSI300 index fell 0.6% to 5,073.36 points at the end of the morning session, while the Shanghai Composite Index dipped 0.2% to 3,517.17 points.

** The Hang Seng index dropped 1.4% to 28,413.42 points, while the Hong Kong China Enterprises Index fell 1.1% to 10,533.91.

** Around the region, MSCI's Asia ex-Japan stock index was weaker by 1.36%, while Japan's Nikkei index was down 3.59%.

** U.S. St. Louis Federal Reserve President James Bullard said on Friday that the U.S. central bank's shift towards a faster tightening of monetary policy was a "natural" response to economic growth and particularly inflation moving quicker than expected as the country reopens from the COVID-19 pandemic.

** Analysts said a hawkish Fed could lead to a stronger dollar and a weaker yuan, pressuring on the A-share market by prompting foreign outflows.

** The A-share market will be under heavy pressure against a backdrop of a strong dollar, said Yan Kaiwen, an analyst with China Fortune Securities.

** Investors on Monday sold a net 764 million yuan ($118.14 million) worth of A-shares via the Stock Connect linking mainland and Hong Kong, according to Refinitiv data.

** Meanwhile, the dollar held near multi-month peaks against other major currencies on Monday.

** China kept its benchmark lending rate for corporate and household loans unchanged for the 14th straight month at its June fixing on Monday, in line with market expectations.

** The Financial News, backed by the Peoples Bank of China (PBOC), on Sunday advised against speculating about liquidity tightening and policy direction, saying such action can mislead and roil markets.

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