Mainland Chinese and Hong Kong stocks may face a challenging fourth quarter as investors contend with underwhelming stimulus measures from Beijing, tighter financial conditions in the US and a shift in the narrative around the artificial intelligence trade, according to analysts.
The two markets were likely to consolidate through the rest of the year as investors digest the negatives before settling on a clearer direction, according to brokerages including Zheshang Securities and CCB International.
CCB International, the investment banking unit of China Construction Bank, predicted that the Hang Seng Index would trade in a range between 22,500 and 26,000 over the next three months, with risks skewed to the downside. The benchmark closed the third quarter at 24,613.27.
Sentiment on stocks has been deteriorating heading into the fourth quarter. Rates traders are now pricing a 47 per cent probability of a quarter-percentage-point interest rate increase by the Federal Reserve in October, leaving US Treasury yields at multi-year highs.
