Daily Report

China, Hong Kong stocks surge as turnover spikes on strong trade data

PUBLISHED : Wednesday, 13 April, 2016, 9:19am
UPDATED : Thursday, 14 April, 2016, 3:08pm

Chinese stocks closed on Wednesday at their highest level in over three months, with a spike in trading volumes, as the surprisingly strong trade data for March reflected improving economic conditions in China.

Hong Kong’s Hang Seng also recorded its biggest one-day rally in two months, extending its bull run to a sixth session.

The Shanghai Composite Index advanced 1.4 per cent, or 42.99 points, to 3,066.64. The CSI300 rose 1.3 per cent, or 42.93 points, to 3,261.38. The Shenzhen Composite Index finished up 1.4 per cent, or 26.83 points, at 1,962.43. Start-up index ChiNext ended 1.3 per cent, or 30 points, higher at 2,294.01.

Turnover for Shanghai and Shenzhen spiked 41 per cent to 824 billion yuan from Tuesday’s 582 billion yuan. A-shares also attracted massive fund inflows from overseas. The northbound quota for the Shanghai-Hong Kong Stock Connect scheme, which reflects foreigners’ investment in Shanghai stock market, saw inflows of 3.6 billion yuan, the highest since the end of January.

Hong Kong’s Hang Seng Index rose for a sixth straight session, up 3.2 per cent, or 654.27 points, to close at 21,158.71, its highest since early January. The Hang Seng China Enterprises index surged 4 per cent, or 349.63 points, to 9,191.49.

Turnover in Hong Kong soared 80 per cent to HK$94 billion from HK$52 billion on Tuesday.

The Chinese customs authorities reported on Wednesday that the nation’s exports in US dollar terms rose 11.5 per cent in March from the same period a year earlier, the first increase in nine months, reversing a 25.4 per cent contraction in February. The figure beat analysts’ expectations in a Reuters poll, which had forecast a 2.5 per cent increase.

Imports continued to fall but at a slower pace, down 7.6 per cent year on year, compared with a decline of 13.8 per cent in February. This number also exceeded market estimates of a 10.2 per cent fall.

“China’s trade data for March point to healthy growth in import volumes and add to growing evidence that the extreme gloom of a few weeks ago about the state of the domestic economy was misplaced,” said Marcel Thieliant and Mark Williams, economists from London-based Capital Economics, in a note.

They are “further signs that conditions are improving” in the Chinese economy, they added.

Minsheng Securities analyst Guan Qingyou said the exports data indicated a bigger possibility of “an upward trend [of stock markets] in the second quarter”.

But Barclays analysts cautioned the improvement in the trade data has a strong seasonal component and may not necessarily imply a continued uptrend.

“We think the recovery in external demand will remain slow and fragile due to uncertainties around the global outlook, including the EU, Japan, and the US,” they said.

“In addition, our forecast that growth will stabilise in Q2 but moderate in H2 suggests that headwinds to China’s outlook and its import demand will remain over in a longer horizon.”

Shipping stocks advanced on the back of upbeat trade data. Shanghai-listed Cosco Shipping soared 9.5 per cent to 7.97 yuan. China Shipping Container Lines and China Shipping Development both gained 2.4 per cent, closing at 5.03 and 7.24 respectively. Hong Kong-traded Pacific Basin Shipping leapt 25.4 per cent to HK$1.53.

Oil shares also pushed higher after crude futures climbed to the highest in 2016 overnight.

In Shanghai, refiner Sinopec rose 2.6 per cent to 5.07 yuan. State-owned oil giant PetroChina added 1.8 per cent to 7.79 yuan.

In Hong Kong, PetroChina rose 7.2 per cent to HK$5.33, the best performer among Hang Seng constituents. Sinopec swung higher by 5 per cent to HK$5.42. CNOOC, China’s largest offshore oil producer, notched up a 6.2 per cent gain to end the day at HK$9.72.

With additional reporting from Jennifer Li.