China stock market

China Markets Live - Hong Kong and China stocks close sharply higher amid regional rally on ECB, BOJ stimulus hopes

Japan stocks leap in anticipation of more central bank easing; crude prices surge above US$30 a barrel in Asian trade

PUBLISHED : Friday, 22 January, 2016, 9:14am
UPDATED : Friday, 22 January, 2016, 5:03pm

Welcome to the SCMP’s live China markets. The intense volatility in Chinese markets into 2016 due to the implementation of the circuit breaker has roiled world financial markets. Investors are increasingly focused on the broader question of how this episode might affect the wider economy of the country. We’ll bring you the key levels, trading statements, price action and other developments as they happen.

Here is a summary of market movements so far today:

  • Hong Kong’s Hang Seng jumps 2.9 per cent at close, bouncing back from a three-and-a-half year low on Thursday
  • Shanghai Composite climbs out of the red, closing up 1.3 per cent
  • Shenzhen Composite also reverses early losses and advances 1.5 per cent at close

4:39 pm By Xie Yu

Hong Kong market also settled sharply higher on Friday, as the Hang Seng Index climbed 2.90 per cent, or 538.36 to 19,080.15. The H-share Index rose 3.44 per cent, or 269.34 points, to 8,104.98.

For the week, the Hang Seng Index dropped 2.26 per cent, posting a fourth consecutive week of losses, after shedding 4.56 per cent in the previous week. The H-share Index retreated 1.59 per cent this week, also falling for a fourth week in a row.

Below is the daily chart of the Hong Kong market. Hang Seng Index (yellow line), H-share index (purple line). The percentage at the end shows the difference from the opening, not the previous close. Click to enlarge the chart.

Below is the weekly chart of the Hong Kong market. Hang Seng Index (yellow line), H-share index (purple line). The percentage at the end shows the difference from the first day’s opening, not the previous close. Click to enlarge the chart.

3:22 pm By Laura He

Crude futures rallied above the US$30 a barrel in Asian trade on Friday, following a sharp rebound overnight. Futures for March delivery of WTI crude improved by 4.4 per cent to US$30.83 a barrel, and March Brent crude also zoomed 4.9 per cent higher to US$30.69 a barrel.

3:10 pm By Laura He

Asian stock markets finished sharply higher, with Japan’s Nikkei Average soaring 5.9 per cent to close at 16,958.53, the broader Topix index surging 5.6 per cent to 1,374.19, South Korea’s Kospi Composite advancing 2.1 per cent to 1,879.43, and Australia’s S&P/ASX 200 rising 1.1 per cent to 4,916.00.

Monetary easing speculation is providing a boost for Asian markets on Friday, in particular for Japan stocks, according to analysts.

Mario Draghi, the European Central Bank President, said Thursday the central bank will “review and therefore possibly reconsider” its policy at its March meeting, after keeping the key interest rates on hold at its Thursday meeting.

Expectations also grow that the Bank of Japan (BOJ)may expand its monetary easing measures at its Jan 28 meeting, after the Nikkei Asian Review reported Friday the BOJ is considering “additional easing (policies)” as tumbling oil prices weigh heavily on the central bank’s 2 per cent inflation target.

“Draghi’s intimation that the ECB may be forced to ease further at their March meeting, as well as fomenting expectations that the BOJ may ease further at their meeting next week, are all supporting the rally, ” Angus Nicholson, an analyst for IG Group, said on Friday.

“It is widely expected that the renewed selloff in oil over the past two months will see the BOJ lower their inflation forecasts. The Japanese yen has also continued to trade below 118 for much of 2016, hurting Japanese exporters and doing little to improve the inflation situation in Japan. These developments appear to be fuelling the chatter around a potential easing by the BOJ next week.” he added.

However, Nicholson said the BOJ may be reluctant to act at its next meeting on January 28, as those sorts of “leaks” to the Japanese press could be a way for “other elements of the government” to try and put pressure on the BOJ to expand monetary easing.

Moreover, Japan’s flash manufacturing PMI (Purchasing Managers’ Index) remained strong in January, which may give the BOJ “a pause” in a slowly improving economic situation.

“GDP was revised up in Q3, business investment is picking up and industrial production has been steadily rebounding. These are the sort of developments that BOJ hawks, such as Takahide Kiuchi, will be pointing to as making it unnecessary to see further easing by the BOJ,” he noted.

3:08 pm By Xie Yu

The mainland stock markets rebounded on Friday, as the Shanghai Composite Index ended up 1.25 per cent, or 36.08 points at 2,916.56, and the CSI300 advanced 1.04 per cent, or 32.12 points to 3,113.46.

The Shenzhen Composite Index closed up 1.46 per cent, or 26.35 points at 1,827.34, and the Nasdaq-style ChiNext Index rose 1.76 per cent, or 37.18 points to 2,149.59.

For the week, the Shanghai Composite Index gained 0.54 per cent, breaking a three-week losing streak. Last week, it plunged 8.96 per cent.

Below is the daily chart for the mainland market. Shanghai Composite Index (yellow line), Shenzhen Composite Index (purple line), CS1300 Index (green line) and ChiNext (blue line). The percentage at the end of the chart represents the difference from the opening, not from previous close. Click to enlarge the chart.

Below is the weekly chart for the Shanghai Composite Index. The percentage at the end of the chart represents the difference from the opening, not from previous close. Click to enlarge the chart.

3:03 pm By Xie Yu

Adam Xu, a Shanghai-based mutual fund manager, said their strategy so far is “to stay as prudent as we can by holding a low position for equities, which helps to adjust the portfolio from time to time”.

“The market is more volatile than any other time – as you can see the SCI (Shanghai Composite Index) lost more than 700 points in just two weeks,” he said.

He said they remain overweight on sectors such as coal mining, high-speed railway, and infrastructure operators, as “the government seems ready to step up fiscal spending for economic stimulus”.

Besides, the reform on the “supply side” has begun taking effect and benefiting some strong competitors in the manufacturing industry, he added.

2:20 pm By Xie Yu

Japan’s Nikkei 225 surged 5.94 per cent to close at 16,969.14.

In Hong Kong, the Hang Seng climbed 2.8 per cent to 19,061.83,. The H-share Index jumped 3.54 per cent, or 277.07 points to 8,112.71.

2:14 pm By Xie Yu

Historical data showed the chance is big for China’s A-share market to go up before the “two sessions”, which is the annual gathering of the nation’s legislators and political advisors in Beijing every March, state media said Friday.

During the past 16 years, the benchmark Shanghai Composite Index (SCI) rallied in the 14 of them before the two sessions, the state-owned Shanghai Securities Journal said in a report. The biggest rally came in March 2000, when the SCI gained 13.23 per cent in the month, and the Shenzhen Component Index rose 13.56 per cent.

2:09 pm By Xie Yu

At this moment, insurers, metal and mining companies, and banks are pulling up the Hong Kong market.

2:09 pm By Xie Yu

Investors should be ultra-defensive with the Chinese stocks, Bank of America Merrill Lynch suggested in a note on Friday.

It said:

“We forecast HSCEI (the Hang Seng China Enterprises Index) to decline by about 7 per cent to about 9,000 (range for the year: 7,400-12,800), and SHCOMP (the Shanghai Composite), (to fall) by about 27 per cent to around 2,600 (range: 2,200-4,000), by 2016 year end.”

“Our top overweight sectors are telecommunications, power, staples, healthcare, and infrastructure oerators; our top underweight sectors are financials, property and resources.”

2:03 pm By Xie Yu

The Chinese government has no intention of devaluing the yuan, and the recent fluctuations in the currency market were caused by market forces, Chinese vice president Li Yuanchao said Thursday at the World Economic Forum in Davos, according to a Bloomberg report.

1:46 pm By Xie Yu

Hong Kong’s benchmark Hang Seng Index advanced 2.45 per cent, or 454.68 points, to 18,996.83. The H-share Index, tracking mainland based companies, jumped 3.05 per cent, or 238.97 to 8,074.61.

1:44 pm By Xie Yu

Mainland markets rose back up after lunch break. The benchmark Shanghai Composite Index traded at 2,902.71 at 1:40 pm, higher by 0.77 per cent or 22.23 points. The CSI300 Index was up 0.71 per cent or 21.80 points at 3,103.15.

The Shenzhen Composite Index added 0.69 per cent, or 12.39 points, at 1,813.39. The Nasdaq-style ChiNext Index rose 0.98 per cent, or 20.77 points, to 2133.18.

12:08 pm By Jessie Lau

The Hang Seng Index closed Friday’s morning session at 18,804.10, up 1.41 per cent or 261.95 points. The Hang Seng China Enterprises index gained 1.76 per cent or 138.19 points at 7,973.83.

Below is the midday chart of the Hong Kong market. Hang Seng Index (yellow), H-share index (purple). The percentage at the end shows the difference from the opening, not the previous close. Click to enlarge the chart.

12:00 pm By Laura He

Crude futures headed higher in Asian trade Friday morning, after jumping in the previous session.

March WTI crude picked up 0.1 per cent to US$29.55 a barrel, following a 4.2 per cent gain on the New York Mercantile Exchange overnight. The US oil benchmark touched an intra-day high of US$30.25 a barrel on Thursday.

Meantime, March Brent crude edged 0.2 per cent higher to US$29.31 a barrel. It spiked 4.9 per cent to settle at US$29.25 a barrel on Thursday on London’s ICE Futures exchange.

11:37 am By Jessie Lau

The Shanghai Composite index closed the morning session at 2,872.42, down 0.28 per cent or 8.06 points while the CSI 300 - which tracks large caps listed in Shanghai and Shenzhen - shed 0.26 per cent or 8.07 points to 3,073.28.

The Shenzhen Composite index fell 0.68 per cent or 12.32 points to 1,788.67 while the Nasdaq-style ChiNext dropped 0.63 per cent or 13.30 points to close at 2,099.10.

Below is the midday chart for the mainland market. Shanghai Composite Index (yellow), Shenzhen Composite Index (green), CS1300 Index (purple) and ChiNext (blue). The percentage at the end of the chart represents the difference from the opening, not from previous close. Click to enlarge the chart.

11:21 am By Enoch Yiu

Offshore yuan continued falling Friday morning to trade at 6.6102 per US dollar at 11:15am. The currency has been weakening for four days in a row after a 0.5 per cent gain on Monday. On a weekly basis, however, it still rose 0.08 per cent. Last week, it was up 1 per cent after the intervention of teh People’s Bank of China.

Meanwhile, onshore yuan rose 0.02 per cent to 6.5796 against the US dollar. The currency has strengthened 0.07 per cent this week after a 0.14 per cent rise last week.

The spread between the onshore and offshore yuan has narrowed down to 306 basis points, down from a record 1,400 basis points on January 7.

11:15 am By Xie Yu

Jefferies warned that more earnings shocks for the utilities sector could come as the Chinese yuan looks set to slide in 2016.

The US investment bank said:

“We believe the Rmb (renminbi) is set to depreciate by 8-10 per cent in 2016, paving the road for more earnings shocks in the near-term. Offshore debt accounts for 25-96 per cent of the gas distributors’ balance sheet and the companies are poised to suffer from sizable translation losses. However, cash flow impact is muted, given their healthy cash flows and balance sheets. Companies are refinancing offshore debt with Rmb denominated borrowings to manage the earnings volatility, though.”

11:08 am By Jessie Lau

The Hang Seng index rose 2.13 per cent or 395.03 points to 18,937.18, and the Hang Seng China Enterprises index gained 2.48 per cent or 194.24 points to 8,029.88.

Meantime, the Shanghai Composite index added 0.27 per cent or 7.91 points to 2,888.39. However, the CSI 300 lost 0.36 per cent or 11.15 points to 3,070.20.

The Shenzhen Composite index also fell 0.86 per cent or 15.51 points to 1,785.49, and the Nasdaq-style ChiNext dropped 0.80 per cent or 16.95 points to 2,095.45.

11:06 am By Enoch Yiu

Hong Kong dollar continued rising Friday morning. It traded at 7.8028 at 10:45 am, after climbing above the 7.81 level on Thursday. The local currency once hit an eight-and-a-half year low of 7.8294 at midnight on Wednesday.

On a weekly basis, the local currency is down by 0.21 per cent.

10:08 am By Jessie Lau

The Shanghai Composite Index rose 0.33 per cent or 9.50 points to 2,889.98, and the CSI 300 added 0.30 per cent or 9.25 points to 3,090.60.

The Shenzhen Composite Index edged up 0.15 per cent or 2.70 points to 1,803.69, and the Nasdaq-style ChiNext Index traded 0.20 per cent higher, or up 4.18 points, to 2,116.58.

10:06 am By Jessie Lau

Hong Kong’s Hang Seng Index came off opening highs, but still rose 2.01 per cent or 372.35 points at 18,914.50. The Hang Seng China Enterprises index, or the H-shares index, gained 2.38 per cent or 186.53 points to 8,022.17.

9:37 am By Jessie Lau

The Hang Seng Index opened sharply higher at 19,000.79, up 2.47 per cent or 458.64 points, and the Hang Seng China Enterprises index gained 3.09 per cent or 242.51 points to 8,078.15.

The Shanghai Composite Index rose 1.02 per cent or 29.48 points to 2,909.96. The CSI 300, which tracks the large caps listed in Shanghai and Shenzhen, advanced 1.02 per cent or 31.55 points to 3,112.90.

The Shenzhen Composite Index moved up 0.95 per cent or 17.09 points to 1,818.09, and the Nasdaq style ChiNext traded higher by 1.03 per cent or 21.70 points to 2,134.11.

9:31 am By Enoch Yiu

The People’s Bank of China set Friday the yuan’s mid-price against the US dollar at 6.5572, 13 basis points stronger than Thursday, when it set the mid-price 7 basis points weaker.

It also set the mid-price against the euro stronger by 170 basis points to 7.1216, and the yuan’s reference rate for every 100 yen stronger by 259 basis points at 5.5778. The Chinese currency’s mid-price against the pound was set 105 basis points weaker at 9.3352.

Traders are allowed to trade up to 2 per cent either side of the mid-price for the day.

9:24 am By Laura He

On Thursday, Hong Kong’s Hang Seng declined 1.8 per cent to close at 18,542.15, the lowest settlement since June, 2012.

Over on the mainland, the Shanghai Composite tumbled 3.2 per cent to 2,880.80, the lowest close since Dec., 2014. The Shenzhen Composite sank 4 per cent to 1,800.99.

9:07 am By Jessie Lau

Hong Kong stocks are set to open higher Friday morning after US stocks rebounded overnight. The Hang Seng Index futures spot January contract gained 0.73 per cent or 137 points to 18,888 in the pre-trading session, and the H-share index futures rose 0.99 per cent or 79 points to 8,026.

All major US indices closed higher on Thursday, with the Dow Jones Industrial Average finishing up 0.74 per cent at 15,882.68, and the S&P 500 closing up 0.52 per cent at 1,868.99. However, the Nasdaq Composite finished up 0.01 per cent at 4,472.06.

On Thursday morning, Tokyo’s Nikkei 225 rose 3.20 per cent to 16,530.13.

More than half of the Hong Kong-listed companies with American Depository Receipts (ADRs) traded in the US saw them close lower than their equivalent Hong Kong closing prices on Thursday fter conversion into the local currency. HSBC’s ADR closed at HK$52.156, up from the HK$51.90 seen at the Hong Kong close, Lenovo fell from HK$6.36 at the Hong Kong close to HK$6.432, Sinopec’s ADR rose from HK$3.91 to HK$4.064 and China Mobile increased from HK$80 to HK$80.825.

Read Thursday’s China Markets Live - Stock rout worsens as Hang Seng hits fresh three-year low; Shanghai shares tumble here on