Hong Kong market rebounds with steepest rise in 12 days as insurance, energy stocks advance

PUBLISHED : Tuesday, 22 November, 2016, 9:04am
UPDATED : Tuesday, 22 November, 2016, 5:41pm

Energy and insurance stocks pushed the Hong Kong market up 1.43 per cent on Tuesday, its biggest rise in almost two weeks.

The Hang Seng Index closed 320.29 points higher at 22,678.07, the biggest one-day gain since November 10, after four major US indexes all climbed to historic highs overnight. Almost all the constituent stocks closed higher, led by energy as well as financial stocks, including banking, insurance and brokerage houses.

Trading turnover on the main board rose 10 per cent to HK$70 billion.

The Hang Seng China Enterprises index, or H-share index, continued to outperform the blue-chip benchmark, rising 2.19 per cent to 9,651.45.

“People are getting certain on a December interest rate rise in the US, which will benefit the banking sector but add downside pressure to local property stocks,” said Kenny Wen Kit, wealth management strategist at Sun Hung Kai Financial.

Government cooling measures three weeks ago that made it more expensive to buy a second-home also increased uncertainty in the property market outlook, Wen said.

CNOOC, one of China’s three major oil producers, was the best performing blue chip with its shares rising 5.24 per cent to HK$10.24 after US oil prices hit their highest level in three weeks overnight.

PetroChina Company shares rose 3.85 per cent to HK$5.4 and Sinopec gained 2.84 per cent to HK$5.44.

China Life Insurance Company continued its rally, ending 2.86 per cent higher to HK$21.55, while China Construction Bank closed 2.18 per cent higher to HK$5.62.

Macau casino operator Galaxy Entertainment at one stage hit a 52-week high at HK$38.2, but slid back slightly to end at HK$36.5, down 0.14 per cent.

Charles Li, chief executive of exchange operator Hong Kong Exchanges and Clearing, said on Tuesday that regulators may make an announcement in the coming one to two weeks regarding the launch of the Shenzhen Hong Kong Stock Connect.

We believe the property sector faces continued pressure from the government’s recent policy tightening measures
JP Morgan Securities report

Li said he had expected the linkage scheme to be launched on a Monday this month, but added that there is still some work to be done.

HKEx shares inched up 0.69 per cent to HK$203.8.

Hong Kong’s stock market will be largely influenced by the recovery in the Macau gaming sector and continued improvement in the Hong Kong retail market next year, JP Morgan Securities wrote in a report on Monday.

“Regardless of the direction of the US bond yield, we believe the property sector faces continued pressure from the government’s recent policy tightening measures, which is likely to hurt industry margins as developers are expected to absorb the burden of the stamp duty increase,” JP Morgan analyst Adrian Mowat wrote in the report, titled “Greater China - Asian Year Ahead 2017”.

The uncertain political environment in Hong Kong will continue until the end of the first quarter in 2017 when the market will have visibility on the appointment of the city’s new chief executive, Mowat said.

On the mainland, the Shanghai Composite Index extended its gains for the second day to stand at a 10-month high. It ended at 3,248.35, up 0.94 per cent or 30.2 points. The CSI 300 — which tracks the large caps listed in Shanghai and Shenzhen — was up 0.79 per cent to close at 3,468.36.

The Shenzhen Component Index increased 0.79 per cent to 10,985.6 with the Nasdaq-style ChiNext rising 1.16 per cent to 2,177.65.

Shenzhen-listed Beijing Soft Rock Investment saw its shares rise to their daily limit of 10 per cent, ending at 15.74 yuan after it announced on Monday night an end to negotiations with Dalian Wanda Group regarding the back-door listing of its Dalian Wanda Commercial Properties.

Wanda said in a statement on Tuesday that it only made initial contact with Soft Rock and there had not been any formal negotiation or agreements, describing Soft Rock’s announcement as “hype”.