Daily Report

Hong Kong, China stocks close higher after oil price rally

PUBLISHED : Tuesday, 19 April, 2016, 9:16am
UPDATED : Tuesday, 19 April, 2016, 6:28pm

Hong Kong and China markets swung between gains and losses to close up on Tuesday, after US stocks recorded a nine-month high overnight and oil prices rallied on the back of a workers’ strike in Kuwait.

The Hang Seng Index opened strongly before retreating in morning trading but bounced back in the afternoon. It closed the day 1.25 per cent, or 264.52 points, higher at 21,426.02, while Hang Seng China Enterprises index was up 1.57 per cent, or 143.03 points, at 9,233.88.

The top five active shares closed mixed on Tuesday, with three bank and insurance companies advancing. HSBC Holdings gained the most, up 3.17 per cent, to HK$50.5, followed by Ping An, which added 1.34 per cent to reach HK$37.9. China’s second-largest lender CCB jumped 1 per cent.

Philip Securities director of asset management Louis Wong Wai-kit said banks and insurers outperformed as investment is gaining momentum, leading to greater demand for bank loans. All 14 Hong Kong-listed insurers rallied on the day.

Wong said the Hong Kong market’s strong performance was due to the rebound in oil prices overnight. His view was echoed by Core-Pacific Yamaichi Hong Kong head of research Castor Pang.

US crude and Brent prices continued to extend their rally on the back of the Kuwait strike. West Texas Intermediate was up 1.18 per cent and Brent up 1.26 per cent on Tuesday.

“The sell-off on Monday was because of the failure of the Doha meeting to freeze output, but that only had a short-term impact on the market,” Wong said, adding that he expects the Hang Seng Index to test its resistance at 21,500 points in the short term.

“The Hong Kong and Shanghai markets are still well supported by the economic recovery of China since the first-quarter growth figure is stronger than expected,” he said.

Pang also said he believes the Chinese economy would not worsen in the second quarter.

Automobile stocks in Hong Kong outperformed, with the market anticipating a rollout of new models at next week’s Beijing auto show. BYD jumped 2.40 per cent to HK$44.80, while GAC rallied 3.8 per cent to HK$9.03.

China’s second-largest internet company, Tencent, slid 0.48 per cent to HK$164.9 after chairman Pony Ma announced a new personal charity fund to which he pledged 100 million shares of the Hong Kong-listed company.

Chinese stocks were also volatile, bouncing back from minor losses mid-morning to return to the positive territory by market close.

The Shanghai Composite Index closed 0.3 per cent higher at 3,042.82 while the CSI 300 tracking large companies listed in Shanghai and Shenzhen rose 0.31 per cent to 3,238.30.

The Shenzhen Composite Index tacked on 0.3 per cent to 1,958.20 while the Nasdaq-style ChiNext added 0.31 per cent to close at 2,272.52.

Elsewhere in Asia, Nikkei 225 rallied 3.68 per cent, or 598.49 points, to 16,874.44. South Korea’s benchmark index was up 0.11 per cent while Australia’s edged up 0.96 per cent.