Hong Kong, China stocks close mixed on weak results and expectations of stimulus policies
Mainland Chinese equities swung between gains and losses on Wednesday, closing slightly higher on expectations of new stimulus policies from Beijing, while Hong Kong stocks fell as investor sentiment soured amid weak company results.
The Shanghai Composite Index added 0.35 per cent to close at 3,009 after changing direction repeatedly through the day as investors tested the strength of the recent rally which pushed the benchmark up 10 per cent in two months.
China technology counters gained Wednesday while airline stocks declined after the deadly terrorist attacks in Brussels. Air China was among the worst performers, down 1.44 per cent to close at 6.48 yuan (HK$7.74)
Victor Au, chief operating officer at Delta Asia Financial Group, said the fluctuation in Chinese stocks comes as investors adopt a wait-and-see attitude on expectations of new stimulus policies to be introduced during the Boao Forum this week.
Hong Kong stocks were down slightly on Wednesday, with the benchmark Hang Seng index dipping 0.25 per cent to 20,615 points. The Hang Seng China Enterprise Index, tracking China-based companies, fell 0.3 per cent to 8,873.19.
Tencent, the most heavily traded stock, edged up 0.13 per cent to close at HK$159.7. But its turnover slumped to HK$2.46 billion from Tuesday’s HK$3.18 billion.
Au said investors believe it is safer to stay on the sidelines during the ongoing Boao Forum, adding that the upcoming Easter holidays will also reduce investment appetite.
The Hang Seng Index seems resilient at its current level. But it lacks momentum to go up further given the still struggling macroeconomy
Disappointing corporate earnings contributed to the lacklustre performance of Hong Kong shares. “The city’s stock market will fall as investor sentiment has been hit after some index constituents reported weak corporate earnings amid China’s sluggish economy,” Au said. “But the benchmark is expected to go up in early April, testing 21,000 if the stimulus policies take effect on the mainland.”
Overnight, stocks in the US and Europe held steady after terrorist strikes in Brussels killed at least 30 people and wounded more than 230. The Dow Jones industrial Average slipped 0.2 per cent, the Nasdaq Composite gained 0.3 per cent and the S&P 500 ended down 0.1 per cent. Stock markets in the UK and Germany ended the day with small gains.
However, Au cautioned that the possibility of an April US Federal Reserve interest rate increase and more announcements of weak company results, coupled with expectations of retreating oil prices, are all potential risks dragging on Hong Kong stocks.
Kevin Leung, director of global investment strategy at Haitong International Securities, said he did not expect a major correction in the Hong Kong market even though it seems to have reached a short-term peak.
“The Hang Seng Index seems resilient at its current level. But it lacks momentum to go up further given the still struggling macroeconomy,” he said. “As the stimulus policies are launched, the Hong Kong benchmark could jump with stronger momentum in the second half, testing the 23,000 level.”
Additional reporting by Xie Yu
