Market Wrap: Hong Kong stocks dip ahead of Fed; GCL jumps
Hong Kong stocks dipped on Thursday, even as solar and property stocks gained sharply, as investors remained cautious ahead of the outcome of the U.S. Federal Reserve FOMC meeting just after midnight (HKT).
“The market looks cheap, but investors are still a little bit cautious in the short term”, said Heather Hsu, head of research at Fortune CLSA Securities Ltd. “You can see Chinese government’s stimulus having an impact here and there, but those measures are unlikely to boost near-term corporate earnings.”
The benchmark Hang Seng Index lost 0.14 per cent, or 27.76 points, to end at 20,047.63 on Thursday. The Hang Seng China Enterprises Index lost 0.09 per cent, or 8.25 points, to close at 9,480.27.
China said on Wednesday that it had approved a package of measures aimed at boosting exports. The State Council said it would “stabilise” foreign trade by speeding up payment of tax rebates to exporters, among other measures, according to a statement posted on the website of the central government late on Wednesday.
Mainland property developers gained across the board after Kaisa Group (1638.HK) said Citi, Deutsche Bank and HSBC have agreed to buy US$250 million worth of senior notes due 2017 at 12.875 per cent, flagging a potential solution for other debt-laden property developers seeking liquidity.
“The bond sale result is pretty encouraging,” said Kenny Tang, general manager of securities business division at AMTD Financial Planning Ltd. “The notes were obviously welcomed by investors and I expect more mainland developers to follow Kaisa’s example to raise cash.”
Kaisa gained 2.17 per cent to HK$1.41. Evergrande Real Estate Group (3333.HK), gained 3.41 per cent to HK$3.03, while Poly Property Group (0119.HK), the nation’s No.2 property developer by market value, gained 3.87 per cent to HK$4.29.
“The bonds will improve Kaisa's liquidity, which will in turn help the company operate through the challenging bank credit conditions prevalent in China," Franco Leung, a Moody's analyst said in an emailed note.
The solar sector was also in vogue on Thursday, with GCL-Poly Energy (3800.HK), the world’s biggest producer of poly-silicon, a raw material for making solar cell, surging 10.62 per cent to HK$1.25, lifted by government plans to put more money into the renewable sector.
China's energy regulator said on Wednesday that it will invest as much as 250 billion yuan between now and the end of 2015 in developing the domestic solar industry. The news comes as Chinese solar makers are losing their edge in their two largest markets -- the US and the European Union -- after US and European firms sued to impose high anti-dumping duty on China-made solar products.
Industry analysts, however, said it remains to be seen whether domestic demand can drag loss-making solar firms back into profitability. “Today’s rally was irrational. This is short-term speculation. When they realise it may take years for domestic market demand to pick up, those stocks will fall again,” said Keith Li, an analyst from CIMB Securities.
China Unicom (0762.HK) and SmarTone Telecommunications (0315.HK) led gains in telecom stocks on speculation that the launch of iPhone 5 will boost their revenue. China Unicom, which is said to start selling next-gen iPhone by the year-end, closed 2.03 per cent higher at HK$13.10, while SmarTone gained 4.78 per cent to end at HK$15.78.
Neptune Group (0070.HK) surged 14.88 per cent to HK$0.19. The casino operator said net profit for the first half ended June 30 will see large increase from a year earlier. No specific number was given.