Hong Kong stock market ended lower as investors cautious ahead of Fed meet

The Hong Kong stock market ended lower on Wednesday as investors kept a cautious stance ahead of the U.S. Federal Reserve's policy decision later in the day and on reports of renewed tension in U.S.-China trade negotiations.

The Hang Seng index closed 0.5 per cent weaker at 29,320.97 points. The Hang Seng China Enterprises index ended down 0.5 percent. The sub-index of the Hang Seng tracking energy shares ended down 0.5 per cent, while the IT sector dipped 0.6 per cent, the financial sector ended 0.8 per cent lower and property shares lost 0.5 per cent. Investors' immediate focus was on the Fed to see whether the central bank will affirm its commitment to "patient" monetary policy and for clues about the likely path of U.S. borrowing costs. The U.S. Federal Reserve is due to announce its decision on interest rate later on Wednesday.

The central bank will remain patient for a little longer than thought last month, waiting until the third quarter before raising rates once more, and then stay on the sidelines, a Reuters poll of economists showed. But "there is the risk of a communication mistake ... that the Fed accidentally sends the message it is very worried about the U.S. and global outlook, and that the next move is, in fact, a rate cut," Thomas Costerg, a senior U.S. economist at Pictet Wealth Management, said in a note this week. Meanwhile, market players held on to hopes of a trade deal between Washington and Beijing as officials from both sides remained locked in negotiations.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin plan to travel to China next week for a new round of trade talks with Chinese Vice Premier Liu He, a White House official said on Tuesday. Trading volume in Hong Kong thinned ahead of Fed decision. About 1.63 billion Hang Seng index shares were traded. The volume traded in the previous trading session was 1.80 billion, and 1.95 billion in the session before that. The top gainer on the Hang Seng was Hengan International Group Co Ltd, which ended up 5.4 per cent, while the biggest loser was Sino Biopharmaceutical Ltd, which closed 3.4 per cent lower.

China's main Shanghai Composite index and the blue-chip CSI300 index were both flat. Around the region, MSCI's Asia ex-Japan stock index was weaker by 0.2 per cent, while Japan's Nikkei index closed up 0.2 per cent. At the close, China's A-shares were trading at a premium of 24.21 per cent over the Hong Kong-listed H-shares. The short and one-factor leveraged Hang Seng index, which is designed to replicate the payoff of a short or leveraged portfolio and is linked to the movements of the Hang Seng Index, was higher by 0.5 per cent on the day at 4,691.77 points.