Daily Report

Hong Kong shares weaker on US results; mainland China mixed after commodity prices fall

PUBLISHED : Friday, 22 April, 2016, 9:05am
UPDATED : Friday, 22 April, 2016, 6:43pm

Hong Kong shares weakened on Friday, tracking regional bourses after US markets broke a three-day winning streak amid disappointing earnings from blue chip US companies.

The Hang Seng Index slid 0.94 per cent or 202.9 points to 21,419.35 while the Hang Seng China Enterprises index dropped 1.61 per cent or 148.81 points to 9,099.59.

Louis Tse Ming-kwong, director of VC Brokerage, said the decline in overseas markets was a good excuse for investors to take a breather after Hong Kong stocks hit their highest level this year at Thursday’s close.

“Oil prices have gone down, there’s been a mixed bag of first quarter results from the US, and the Shanghai Composite Index went below 3,000 ... that doesn’t bode well for the Hong Kong market,” he said.

However, Hong Kong stocks saw a mixed performance on Friday, with some companies gaining on good news, shrugging off the overseas market declines.

Hong Kong shares of AIA, the third-largest Asia-based insurer, rallied to close 1.52 per cent higher at HK$46.65 after its first-quarter new business value grew twice as fast as analysts’ estimates, becoming the most heavily traded stock with turnover of HK$1.81 billion.

The insurer rose as much as 4.5 per cent to HK$48, the highest intraday price since December 10.

State-owned China Eastern Airlines jumped as much as 2.84 per cent to HK$4.70 when it resumed trading on Friday morning after it had announced a partnership deal with Ctrip, China’s largest online travel booking platform on Thursday. Ctrip promised to invest 3 billion yuan (HK$3.6 billion) in the airline for a possible 10 per cent stake.

The airline’s share price retreated in the afternoon amid a sluggish market to close up 0.44 per cent at HK$4.50.

[China’s securities regulator] tried to suppress that speculation because commodity prices [went] sky high
Louis Tse Ming-kwong, VC Brokerage

Ben Kwong Man-bun, director at securities firm KGI Asia, saw some positive signs, with the market expecting a US Fed interest rate rise to happen later rather than sooner, and the launch of the Shenzhen Hong Kong stock connect in the next two months.

Hopes for the stock connect plan helped push Hong Kong Exchanges and Clearing up over two consecutive days, jumping 0.8 per cent to close at HK$202.6 on Friday after it recorded a four-month high at HK$201 on Thursday, its highest level since December 24 last year.

Mainland China stocks hovered between minor gains and losses on Friday. The Shanghai Composite Index added 0.22 per cent or 6.35 points to 2,959.24, while the CSI 300, which tracks large companies listed in Shanghai and Shenzhen, rose 0.45 per cent to 3,174.90.

The Shenzhen Composite Index was up 1.03 per cent or 19.03 points to 1,867.56 while the Nasdaq-style ChiNext added 1.27 per cent or 26.76 points to 2,136.92.

The coal mining industry dragged down mainland Chinese markets, as the sector fell by 1.39 per cent after future exchanges in Shanghai, Dalian and Zhengzhou raised their fees to try and dampen speculation and issued warnings toinvestors on Thursday evening after futures trading on everything from steel reinforcement bars to cotton soared this week.

Yanzhou coal mining company fell 2.5 per cent to 10.57 yuan, while China Shenhua Energy Company declined 0.88 per cent to 14.71 yuan.

Tse from VC Brokerage said that retail investors, which make up the bulk of investors on the mainland, had previously driven up commodity prices by speculating on the market.

“Commodity [prices] have gone down substantially for the past couple of days. [China’s securities regulator] tried to suppress that speculation because commodity prices [went] sky high,” Tse said.