Chinese stocks wobble ahead of activity data, investors await stimulus

June 14 (Reuters) – Chinese stocks erased gains and ended flat to lower, while Hong Kong shares dipped on Wednesday, as investors booked profit ahead of the release of May activity data and awaited more stimulus measures to support the country’s economic recovery.

** China’s blue-chip CSI 300 Index was flat, while the Shanghai Composite Index slid 0.14%.

** Hong Kong’s Hang Seng Index went down 0.58%, while the Hang Seng China Enterprises Index declined 0.62%.

** Meanwhile, Asian shares struggled for traction and the dollar was subdued as the market focuses on the probability of a less aggressive US Federal Reserve at its policy meeting which concludes on Wednesday.

** China is set to announce key May economic data, including retail sales and industrial production, on Thursday.

** China’s new bank lending rose to 1.36 trillion yuan (USD 189.83 billion) in May, data from the People’s Bank of China (PBOC) showed on Tuesday, up from April but missed analysts’ estimates.

** To restore market confidence, China’s central bank lowered a short-term lending rate for the first time in 10 months.

** The market expects that the next adjustment to rates could come as soon as Thursday, when the central bank is due to roll over 200 billion yuan in medium-term lending facility (MLF) loans.

** “We expect the PBOC to cut 1-year MLF rate by 10 basis points (bps) on June 15, followed by 10 bps cut in 1-year LPR and larger cuts of 15-20 bps in 5-year LPR on June 20,” Jian Chang, chief China economist at Barclays Asia Pacific, said in a note.

** Redmond Wong, Greater China market strategist at Saxo Markets, said the sentiment has been improving following the rate cut but remains fragile.

** “The question about if the improved sentiment can sustain, or turn even more positive, depends on whether a package of stimulus measures will be released in the coming days,” he said.

** Banks dropped 1.6%, while new energy sector dipped 1.2% to lead declines.

** Hong Kong-listed tech giants edged up 0.4%.

** On the geopolitical front, China’s foreign minister Qin Gang urged the United States to stop meddling in its affairs and harming its security in a phone call with his U.S. counterpart on Wednesday, a tense preview to Antony Blinken’s visit to Beijing expected in coming days.

(Reporting by Summer Zhen; Editing by Nivedita Bhattacharjee and Varun H K)