Hong Kong, Shanghai stocks advance in cautious trade

Hang Seng Index closes 0.14 per cent higher, while Shanghai Composite ends up 0.5 per cent

PUBLISHED : Thursday, 26 May, 2016, 9:19am
UPDATED : Thursday, 26 May, 2016, 7:38pm

Hong Kong stocks ended slightly higher on Thursday, adding to sharp gains in the previous session, even as trading volumes were down by a quarter.

Hong Kong’s benchmark Hang Seng Index gained 0.14 per cent or 29.06 points to 20,397.11, while the Hang Seng China Enterprises Index slid 0.12 per cent or 10.19 points to 8,526.19.

Trading turnover fell 25 per cent to HK$46.43 billion, an indication that upward momentum is lacking, analysts said.

“The benchmark just luckily found support from the stock rally in the United States overnight,” said Victor Au, chief operating officer at Delta Asia Financial Group.

Some investors have priced in the hawkish speech of Federal Reserve officials last week, and expect the appreciation of the US dollar to boost the value of Hong Kong dollar denominated assets, Au said.

“The rebound still lacks momentum as the trading turnover is slim,” Au said, adding that the benchmark could hardly stand above 20,600.

Among sectors leading the gains were oil and gas, automobiles and luxury jewellery and watch retailers.

CNOOC shares jumped 2.1 per cent to HK$9.37, as crude prices in London pushed above US$50 a barrel for the first time in seven months.

Heavyweight HSBC Holdings rose 0.99 per cent to HK$50.85. AIA Group edged 0.45 per cent up to HK$44.5.

Louis Wong Wai-kit, director of asset management at Philip Securities, said that the markets were in an updraft after the big rally on Wednesday.

“Stocks are holding up quite well. They’re supported by a strong closing in the US,” Wong said.

Footwear maker Belle International became the worst performed blue chip as Credit Suisse cut its target price after the firm posted a 38.4 per cent year on year net profit drop for the fiscal year ended February 29.

Hong Kong stocks enjoyed their biggest intraday gain in over a month on Wednesday, with the Hang Seng Index jumping 537.62 points, which was seen as a technical rebound as short sellers closed their positions after the benchmark hovered around a low level for two weeks.

The mood amongst mainland investors remained cautious, as the main share indexes in Shanghai and Shenzhen traded narrowing higher. The mainland indexes failed to keep pace with gains in Hong Kong on Wednesday, leaving them underperformers relative to the last two trading sessions.

The Shanghai Composite Index inched up 0.26 per cent, or 7.36 points, to 2,822.44 while the CSI 300 — which tracks large companies listed in Shanghai and Shenzhen — climbed 0.16 per cent or 4.99 points to 3,064.21.

The Shenzhen Composite Index rose 0.48 per cent, or 8.7 points, to 1,808.93. Among sectors, the mining, brokerage, insurance and banking sectors rose, offsetting losses in transportation and airlines.

In other action, the Nasdaq-style ChiNext ended 0.91 per cent higher, or 18.75 points, to 2,086.01.

“The A-share market is still overshadowed by the ‘L’ shape speech in People’s Daily article,” Au said.