Stock Talk

Hong Kong stocks seen higher on China, US easing hopes

PUBLISHED : Thursday, 23 August, 2012, 8:00am
UPDATED : Wednesday, 29 August, 2012, 3:06pm


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Hong Kong stocks are tipped to rebound from a three-week low at Thursday's open, on speculation that both China and the US will  take further action to stimulate the economy.

Zhou Xiaochuan, head of the People's Bank of China, said after the market closed on Wednesday that the central bank must use "all the tools that is available" to manage monetary policy effectively, fueling speculation China may announce further cuts in reserve requirement ratio (RRR) or interest rates.

Meanwhile, the long-waited minutes from the last Federal Open Market Committee (FOMC), which were released overnight Wednesday, showed that some policy-makers members favour more stimulus measures if the world's largest economy remains stagnant.

The benchmark Hang Seng Index lost 1.06 per cent to close at 19,887.78 on Wednesday, its lowest level since August 6. The Hang Seng China Enterprises Index, which tracks the performance of Hong Kong-listed China enterprises, fell by 1.29 per cent to close at 9,698.83.

Yet downside risks remain and turnover may continue to be subdued as investors await the latest Purchasing Managers' Index for China compiled by HSBC and Markit, as well as some heavyweight stocks' earnings to gauge the extent of the slowdown in the Chinese economy.

Bank of China (3988.HK), Ping An Insurance (2318.HK), China Minsheng Banking (1988.HK) are among a batch of companies to release earnings on Thursday.

US stocks were flat overnight, erasing earlier losses on the FOMC's remarks. The S&P 500 Index edged up 0.32 points, or 0.2 per cent to end at 1,413.49. Europe's The FTSE 100 index fell 1.4 per cent to end at 5,774.20 ahead of a key meeting between the Greek Prime Minister, Antonis Samaras, and the European Central bank.

Factors to watch:

-- Huiyin Household Appliances (1280.HK) said on Wednesday night that first-half profit slumped by 2.6 million yuan from 47.9 million yuan, blaming a gross margin squeeze and macroeconomic policy that was not favourable for China's home appliance industry.

-- Restaurant chain Ajisen (China) Holdings (0538.HK) said on Wednesday night that net profit plunged by 81.6 per cent to HK$41.4 million after rental and labour costs surged.

-- ZTE Corp. (0763.HK) said Wednesday after market close that net profit fell 68.17 per cent to 244.8 million yuan during the first half, due to "reduced investment income, exchange losses, postponement of network contract tenders of certain domestic carriers and lower gross profit margin".

-- Industrial & Commercial Bank of China (1398.HK) and Agricultural Bank of China (1288.HK) will lower deposit rates for several foreign currencies, including the US dollar and the euro staring from Thursday, as demand for the currencies from domestic firms increases amid uncertain economy prospects for the mainland economy, the world's second largest, Reuters reported Wednesday after the market close.