Hong Kong shares regained momentum amid US recession fear

Hong Kong shares steadied on Tuesday after the previous session's heavy losses, but investor sentiment remained fragile as concerns over a possible U.S. recession lingered, and China and the United States readied for the next round of trade talks.

At the close of trade, the Hang Seng index was up 0.15 per cent at 28,566.91 points. The Hang Seng China Enterprises index was steady at 11,231.73. The sub-index of the Hang Seng tracking energy shares rose 0.8 per cent, while the IT sector dipped 0.4 per cent, the financial sector ended 0.09 per cent higher and the property sector rose 0.42 per cent.

As global growth slows, Eric Rosengren, president of the Federal Reserve Bank of Boston, said Tuesday that the U.S. Federal Reserve should consider raising the proportion of short-term Treasury bonds it holds to give itself more options to respond to economic pullbacks.

Investors have been spooked by sharp falls in U.S. bond yields and an inversion of the U.S. Treasury yield curve, which is widely seen as an indicator of an economic recession. On Tuesday afternoon, the 10-year U.S. Treasury yield edged up to 2.4318 per cent, having fallen as low as 2.3770 per cent on Monday.

Investors are also looking ahead to the next round of trade talks as a U.S. trade delegation visits China March 28-29. Trade tensions between the United States and China have caused huge amounts of economic uncertainty and could cut Asia's economic growth by 0.5 percentage point, a senior International Monetary Fund official said on Tuesday.

The top gainer on the Hang Seng was Shenzhou International Group Holdings Ltd, which gained 3.37 per cent, while the biggest loser was AAC Technologies Holdings Inc, which fell 2.98 per cent.

China's main Shanghai Composite index closed down 1.51 per cent at 2,997.10 points, while the blue-chip CSI300 index ended down 1.13 per cent. A-shares have come under pressure amid heavy selling by foreign investors. Analysts at China Fortune Securities said in a note that outflows from northbound investors hit 10.7 billion yuan ($1.59 billion) on Monday, the second-highest level on record.

Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.24 per cent, while Japan's Nikkei index closed up 2.15 per cent.

The yuan was quoted at 6.7116 per U.S. dollar at 08:24 GMT, 0.04 per cent weaker than the previous close of 6.709.

The top gainers among H-shares were Shenzhou International Group Holdings Ltd up 3.37 per cent, followed by China Pacific Insurance Group Co Ltd, gaining 2.81 per cent, and CNOOC Ltd, up by 2.22 per cent.

The three biggest H-shares percentage decliners were SINOPHARM GROUP CO LTD, which was down 3.64 per cent, China Vanke Co Ltd, which fell 3.0 per cent, and Haitong Securities Co Ltd, down by 2.0 per cent.