Hong Kong, China shares tepid, but strong PMIs buoy Chinese banks
Hong Kong and China shares were tepid in morning trade on Friday, with the Chinese banking sector mildly buoyed by a pair of surveys showing solid manufacturing activity in the world’s second-largest economy.
Gains on the day will help mainland indexes creep into positive territory on the week, while stretching a strong week for Hong Kong, where benchmark indexes are heading towards their biggest weekly gain in at least six weeks.
By midday, the Hang Seng Index slipped 0.1 per cent, while the China Enterprises Index of the top Chinese listings gained 0.4 per cent. They are now up 2.2 and 4.8 per cent for the week.
The CSI300 of the leading Shanghai and Shenzhen A-share listings inched up 0.2 per cent, while the Shanghai Composite Index crept up 0.1 per cent. On the week, they are now up 0.4 and 0.5 per cent, respectively.
Volumes in both markets at midday were at their lowest in about a week, suggesting investors may be pulling back ahead of a key Nov. 9-12 China Communist Party policy meeting where major economic reforms are historically decided on.
Chinese local media has been rife with reports on what may be on the agenda of the four-day meeting starting next weekend.
On Friday, the official China Securities Journal reported that China was expected to discuss increased supervision for state-owned firms and the break-up of some monopolies to encourage competition as part of reform efforts at the meeting.
“I think expectations are running too high ahead of the Plenum meeting later this month. We need to be seeing more concrete details before any more gains from here,” said Hong Hao, Bank of Communications International Securities.
But on Friday, strong readings from China’s official and the Markit/HSBC October manufacturing purchasing manager index (PMI) helped eased growth concerns after a big divergence between the two in September, buoying gains for mid-sized lenders in the mainland.
Minsheng Bank climbed 1.6 per cent in Shanghai and 0.9 per cent in Hong Kong. Agricultural Bank of China (AgBank) was the best performing among the “Big Four”, rising 1.3 per cent in Hong Kong and 0.4 per cent in Shanghai.
The sector was also helped on Friday as money rates in the mainland eased further, with benchmark seven-day bond repurchase agreement rates at its lowest in more than a week.
The Chinese auto sector broadly outperformed after Dongfeng Group posted a 39 per cent rise in third quarter profit on improving sales in the mainland. In Hong Kong, Dongfeng climbed 2.9 per cent, while Guangzhou Auto Group spiked 4.6 per cent.
Macau casino operator MGM China climbed 2.4 per cent after its parent reported a narrower third-quarter loss late on Thursday, with gaming revenue data for October due later in the day a catalyst for further gains.
The Nasdaq-style ChiNext board of mainly high growth, technology start-ups listed in Shenzhen dropped 1.4 per cent and have now dived more than 12 per cent from an October 21 closing peak.