China’s benchmark indexes retreated by the midday break after the Federal Reserve delivered its first rate increase since 2023 and kept the door open for another before year-end. The CSI 300 and the Shanghai Composite each shed 0.4 percent, while Hong Kong’s Hang Seng dropped 0.8 percent, as traders repriced the global cost of capital.
Fed lifts benchmark to 3.75-4.00 percent
The U.S. central bank raised its policy rate by 25 basis points on Wednesday, bringing the target range to 3.75-4.00 percent. Officials signaled in updated projections that a further increase remains on the table for 2026, a shift that lifted the dollar and Treasury yields and rippled across Asian markets.
Commodity and property shares lead declines
Mainland commodity sectors bore the brunt of the selloff. The CSI gold sub-index fell 5 percent and non-ferrous metal stocks lost roughly 3 percent. In Hong Kong, property developers slid 1.9 percent, reflecting sensitivity to higher financing costs and a still-fragile domestic recovery.
Analysts favor A-shares over Hong Kong for now
Strategists cited by Reuters said they prefer mainland A-shares for the remainder of the year. The CSI 300 carries heavier weighting in artificial-intelligence hardware and related supply chains, while Hong Kong’s benchmark is more concentrated in consumer-facing internet names that remain exposed to weak household spending.
CICC sees need for new catalysts in Hong Kong
Kevin Liu, a strategist at CICC, said a durable rebound in Hong Kong equities would depend on fresh policy stimulus or a significant breakthrough in artificial intelligence, according to Reuters. Without either, the market lacks a clear driver to offset the drag from higher U.S. yields.
Broader mainland gauges edge lower
The Shenzhen Composite slipped 0.24 percent and the ChiNext Composite eased 0.12 percent. Shanghai’s technology-focused STAR 50 index declined 0.39 percent, underscoring that even the AI-linked corner of the market was not immune to the rate-driven risk-off tone.