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China and Hong Kong stocks slipped further on Thursday as risk sentiment was hit after the U.S. Federal Reserve signalled another rate hike by year-end and much tighter monetary policy through 2024 than previously expected.
** China's blue-chip CSI 300 Index declined 0.9% to close at its lowest since November 2022, while Hong Kong's Hang Seng Index fell 1.3%.
** Asian stocks followed Wall Street's lacklustre lead, dipping across the board as the Fed stiffened its hawkish monetary policy stance, pressuring markets.
** The Fed held interest rates steady, as expected, on Wednesday.
** But it raised its end-2024 and 2025 dot plot projections by 50 bps each, essentially signalling "higher-for-longer" rates, Nomura analysts said in a note.
** "Rising U.S. bond yields, stronger USD and elevated energy prices – all are ingredients for a bad recipe for Asian stocks," Nomura said.
** The reaction from the U.S. equity markets to the Fed's decision was bearish and opened the door for follow-up sell-offs, said Redmond Wong, Greater China market strategist at Saxo Markets.
** "This development in the U.S. market weighed down the already cautious sentiment in the Hong Kong and mainland markets," he said.
** Chinese regulators have started to probe some hedge funds and brokerages on quantitative trading strategies amid a growing outcry against a sector able to profit from share price falls and volatility, sources told Reuters.
** Meanwhile, to restore market confidence, China pledged to speed up the introduction of more policies to consolidate its economic recovery, state media CCTV reported on Wednesday, citing a cabinet meeting chaired by Premier Li Qiang.
** Big Hong Kong-listed tech firms fell 1.9%, with Tencent and Alibaba lost 2% each.
** Country Garden climbed 2% after the embattled company said its creditors had approved extending repayment of seven bonds as of Sept. 12.
** In A-shares, consumer staples dropped 1.8% to lead the decline. (Reporting by Summer Zhen; Editing by Sherry Jacob-Phillips)