September 19, 2019 / 4:50 AM / a month ago

China stocks flat as investors await key rate decision; Hong Kong down

* SSEC 0.0%, CSI300 0.0%, HSI -1.2%

* HK->Shanghai Connect daily quota used 1%, Shanghai->HK daily quota used 1.6%

* FTSE China A50 -0.3%

SHANGHAI, Sept 19 (Reuters) - China stocks steadied on Thursday, ahead of a key domestic rate decision that could offer more clues on Beijing’s easing policy following a U.S. Federal Reserve move to lower borrowing costs.

** The CSI300 index was unchanged at 3,910.64 points at the end of the morning session, while the Shanghai Composite Index was also flat at 2,985.66 points.

** The U.S. Federal Reserve cut interest rates again on Wednesday to help sustain a record-long economic expansion but signalled a higher bar to further reductions in borrowing costs.

** Market participants are now watching closely if and to what extent China would lower its new lending reference rate on Friday following the Fed move.

** Analysts believe the Fed’s rate cuts and the easing by the European central bank allow China more leeway for further monetary easing.

** China trimmed the revamped Loan Prime Rate (LPR) on Aug. 20, as the central bank kicked off interest rate reforms designed to reduce corporate borrowing costs in the world’s second-largest economy.

** “China is rather likely to further lower the LRP tomorrow, but it’s hard for now to predict the exact basis points of the cut,” Shen Xinfeng, an analyst with Northeast Securities said.

** There are still some restrictions for China’s interest rate changes due to relatively high inflationary pressure this year, especially from soaring pork prices, Shen added.

** Wang Yifeng, an analyst with Everbright Securities, expected a gradual and phased path of cuts, saying the LPR would be lowered on Friday by 5-10 basis points, with a further cut of 5-10 basis points in November.

** In Hong Kong, stocks were down for a fourth session amid lingering worries over protests.

** The Hang Seng index dropped 1.2%, to 26,421.91 points, while the Hong Kong China Enterprises Index lost 1.1%, to 10,367.97 points.

** Hong Kong’s Jockey Club cancelled all races planned for Wednesday after pro-democracy protesters said they would target the Happy Valley racecourse where a horse part-owned by a pro-China lawmaker was due to run.

** The Hong Kong Monetary Authority’s move to cut interest rates for the second time this year following the Fed’s decision overnight provided little support to the market.

** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.56% while Japan’s Nikkei index was up 0.51%.

** The yuan was quoted at 7.1023 per U.S. dollar, 0.22% weaker than the previous close of 7.087.

** The largest percentage gainers in the main Shanghai Composite index were CSD Water Service Co Ltd, up 10.04%, followed by Jiangyin Jianghua Microelectronics Materials Co Ltd, gaining 10.01% and Shanghai Aerospace Automobile Electromechanical Co Ltd, up by 10%.

** The largest percentage losers in the Shanghai index were Zhejiang Guangsha Co Ltd, down 9.27%, followed by Jiangsu Shemar Electric Co Ltd, losing 6.59% and Shanghai Environment Group Co Ltd, down by 5.77%.

** The top gainers among H-shares were Shenzhou International Group Holdings Ltd, up 1.5%, followed by ENN Energy Holdings Ltd, gaining 0.78% and Postal Savings Bank of China Co Ltd, up by 0.64%.

** The three biggest H-shares percentage decliners were China Resources Beer Holdings Co Ltd, which has fallen 3.27%, PetroChina Co Ltd, which has lost 2.8% and Haitong Securities Co Ltd, down by 1.9%.

** As of 04:15 GMT, China’s A-shares were trading at a premium of 29.21% over the Hong Kong-listed H-shares.

Reporting by Luoyan Liu and John Ruwitch; Editing by Aditya Soni

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