Hang Seng Index hits lowest level in a year on expectations of higher interest rates
The index falls amid growing unease after Hong Kong banks and Fed hold rates steady
The benchmark Hang Seng Index fell below 24,000 on Thursday morning amid growing market expectations of an interest-rate increase later this year.
The index dropped 1.7 per cent to 23,900.01 in morning trading, its lowest level in a year. It ended the day down 1.6 per cent at HK$23,924.81.
The decline followed the S&P 500 Index’s 1.2 per cent drop overnight, after the US Federal Reserve’s quarterly projections indicated nine Fed officials anticipated an increase in interest rates by the end of this year. An updated policy statement also removed language that indicated the likelihood of an interest-rate cut this year.
The HKMA kept its base rate at 4 per cent hours after the Fed maintained its target range at 3.5 per cent to 3.75 per cent following the fourth meeting of the Federal Open Market Committee (FOMC) this year.
Hong Kong’s three note-issuing banks – HSBC, Standard Chartered and Bank of China (Hong Kong) – announced that they would keep their prime and savings rates unchanged, according to separate statements on Thursday.