Update | Shanghai stocks close with modest gains led by defence shares, Hong Kong’s Hang Seng knocked 2.3pc lower
Investors keep close eye on potential key policy signals from the ‘Two Sessions’ that kicked off on Monday in Beijing
Defence shares led Chinese mainland stocks higher on Monday after Premier Li Keqiang said growth in the nation’s military spending will accelerate in the opening session of the annual legislative meeting. Hong Kong stocks tumbled the most in three weeks on renewed concern a looming trade war will dent global growth.
The Shanghai Composite Index added 0.1 per cent, or 2.40 points, to 3,256.93 at the close. Hong Kong’s Hang Seng Index shed 2.3 per cent, or 697.06 points, to 29,886.39, extending a weekly loss after US President Donald Trump decided to impose tariffs on imports of steel and aluminium.
In the annual work report delivered to the delegates of the National People’s Congress, Premier Li said China will boost its military expenditure by 8.1 per cent, or 1.1 trillion yuan (US$174 billion) in 2018. That compared with a 7.1 per cent growth rate a year earlier. The annual target for economic growth was set at around 6.5 per cent and the deficit goal was lowered to 2.6 per cent of gross domestic product from 3 per cent over the past two years, the first cut since 2012, according to the report.
“China needs money to develop its sophisticated weapons so we’ll see a constant increase in the military budgets and that serves as catalyst for military stocks,” said Wei Wei, a trader at Huaxi Securities in Shanghai. “For Hong Kong, the stocks are still in the downward trajectory and aren’t likely to bottom out soon.”
Shanghai Huace Navigation Technology, a maker of global navigation satellite systems, surged by its daily limit of 10 per cent to 44.63 yuan. Avic Electromechanical Systems jumped 5.9 per cent to 10.24 yuan. Avic Shenyang Aircraft advanced 1.3 per cent to 30.03 yuan. Xi’an Chenxi Aviation Technology gained 2.7 per cent to 28.59 yuan. China Aerospace Times Electronics added 1.9 per cent to 7.63 yuan.
Cement and paper makers, dropped in mainland trading after Li’s work report mentioned that China will further crack down on pollution.