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Thursday, December 15, 2016, 16:22

Stocks end at 4-month low after Fed tightens

By Reuters

Hong Kong stocks slumped to a four-month low, tracking Asian markets, after the U.S. Federal Reserve raised interest rates and rate-path projections.

The benchmark Hang Seng index extended early losses to end down 1.8 percent, at 22,059.40 points. The Hong Kong China Enterprises Index lost 2.3 percent, to 9,479.16 points.

The market had priced in the US quarter-point rate increase, but investors were spooked after the Fed projected three hikes next year, up from two previously, indicating a more aggressive tightening path.

The market lost ground across the board, with the energy sector, raw materials and real estate shares ore than 2 percent at the close.

Property shares lost favour with investors after Hong Kong raised the city's base rate by 25 basis points, thanks to the Hong Kong dollar's peg to the greenback.

The financial sector also fell sharply, led by mainland banks and insurers, amid concerns of a liquidity crunch there after several China treasury futures contracts fell to their daily limit.

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