Daily Report

Shanghai, Hong Kong stocks trade mostly flat as China’s top legislative meetings draw to a close

Hang Seng Index ends 0.2 pc lower

PUBLISHED : Wednesday, 16 March, 2016, 9:15am
UPDATED : Wednesday, 16 March, 2016, 5:20pm

Both the mainland and Hong Kong markets traded within a narrow band on Wednesday, as investors assessed policy developments from China’s top decision makers as the annual two sessions drew to a close.

China’s two sessions, referring to the annual meetings of the National People’s Congress (NPC) and Chinese People’s Political Consultative Conference, ended on Wednesday as Premier Li Keqiang pledged to stabilise the Chinese economy during a post-NPC press conference.

Investors were also moving to the sidelines ahead of further clues on the direction of US interest rates. The Federal Reserve’s Policy Board will conclude its monthly two-day policy meeting later in the US trading day.

The benchmark Shanghai Composite Index added 6.06 points, or 0.21 per cent, to close at 2,870.43 on Wednesday. The Shenzhen Composite Index lost 1 per cent to end the session at 1,711.47. The Nasdaq-style ChiNext ended 1 per cent lower at 1,977.54.

Banking, oil and gas, utilities were the best performers during Wednesday’s trade in Shanghai and Shenzhen.

Harrison Hu, an analyst with Shenyin Wanguo Securities, said the mainland A share market might trade flat for a while in the wake of the top legislative meetings.

“Nothing surprising came from the meetings. However, it is clear that top decision makers want to take good care of China’s stock market and that can be interpreted as a positive signal,” he said.

Premier Li Keqiang, speaking at a post-NPC press conference on Wednesday, urged authorities to carefully monitor markets to prevent financial risks and protect the interests of investors.

Li also said the mainland securities regulators were in close communication with their Hong Kong counterparts and will try to launch the Shenzhen-Hong Kong stock connect programme this year.

It is too early to decide whether the stock market has switched tracks from its bearish downtrend, Hu said. He noted that sock market intervention by China’s “national team” has helped to prop up the mainland share markets in recent weeks during the two legislative sessions, noting that the banking sector in particular was lifted several times by large-scale buying.

In other action, Hong Kong’s benchmark Hang Seng Index eased 0.15 per cent, or 31.07 points to 20,257.70. The Hang Seng China Enterprises Index, tracking mainland based companies, fell by 0.40 per cent to 8,571.36.

Ping An Insurance, the nation’s second biggest insurer, rose by 0.86 per cent to HK$35.30, after it reported 38 per cent increase in net profit.

Louis Tse Ming-kwong, director of VC Brokerage, said Hong Kong stocks were winding down after a recent rally.

“The Hang Seng Index went up from 18,000 to 20,500 in the last few weeks. That’s quite a jump. In the short term, investors are taking profit ahead of the US Fed’s announcement ,” said Tse.

Tse added that even if the Federal Reserve is unlikely to increase interest rates on Thursday, investors are looking to see if Fed Chair Janet Yellen makes any statements matching Europe’s recent policies to boost the economy.

Tse added that investors were taking a breather and digesting several recent company restructuring announcements. “The market at the moment is directionless...there’s not much momentum to push it higher.”