Hong Kong stocks rally for third day to 26-month high on strong earnings expectations and Apple boost

Hang Seng rises as much as 0.8pc in early trade, but closes up 0.2 pc at 27,607.38 – its highest level in 26 months

PUBLISHED : Wednesday, 02 August, 2017, 9:23am
UPDATED : Wednesday, 02 August, 2017, 10:52pm

Hong Kong stocks advanced for a third day running on Wednesday, as strong earnings expectations pushed up a bunch of large cap blue-chip stocks, including CK Hutchison Holdings, the conglomerate owned by Hong Kong’s richest man Li Ka-Shing.

The Hang Seng Index rose as much as 0.8 per cent to 27,747.35, the highest intra-day level since late May 2015, as Tencent and insurer AIA both hit record levels again in earlier trade.

The benchmark index surrendered most of gains by market close, but was still up 0.2 per cent, or 67.15 points, to finish at 27,607.38, the highest level in 26 months.

The Hang Seng China Enterprises Index, known as the H-share index, rose 0.3 per cent to 11,055.42.

Daily turnover maintained above HK$100 billion (US$12.8 billion), reaching HK$104.8 billion, slightly higher than Tuesday’s HK$103.3 billion.

“Hong Kong stocks still have potential to seek new highs, as their valuations remain relatively low and mainland funds will keep flowing into the market, ” said Yang Shu, an analyst for Sinolink Securities.

“A strong Wall Street will also support the Hong Kong market, as the bull market continues on the back of upbeat corporate earnings.”

Louis Tse Ming-kwong, a director of VC Brokerage, described the market as on a “hot trend”.

“If you look at turnover, it has reached beyond HK$100 billion. That’s a substantial increase and means that money is still coming into Hong Kong.”

He added solid interim results from Hong Kong and mainland companies are likely to keep the market sentiment buoyant in the near future.

CK Hutchison was the biggest contributor to the index, responsible for 27 points of gains. It closed at a two-year high of HK$107.5, up 3.1 per cent.

The conglomerate announces interim results on Thursday and Credit Suisse is expecting a 4 per cent increase in its first-time profit, maintaining its stock rating of “Outperform”.

Wharf Holdings and Hong Kong Exchanges & Clearing, both due to reveal earnings soon, rose 5.7 per cent and 1 per cent, respectively, to HK$70.6 and HK$229.8.

Apple-related stocks jumped after the US tech giant reported forecast-beating results for the June quarter and saw its stock price reach a new high overnight in New York.

AAC Technologies, which supplies acoustic components for iPhones, jumped 4.8 per cent to HK$110.2. Camera module maker Sunny Optical climbed 3.1 per cent to HK$94. Electronic component manufacturer Tongda Group gained 2.3 per cent to HK$2.26.

Tencent and AIA, however, both pulled back from record highs and dropped 0.6 per cent, closing at HK$312.6 and HK$61.6, respectively.

In the mainland, the Shanghai Composite Index snapped a five-day winning streak and retreated 0.2 per cent to 3,285.06. The large-cap CSI300 dropped 0.3 per cent to 3,760.85.

The Shenzhen Composite Index and the ChiNext Price Index fell 0.7 per cent and 0.9 per cent each to 1,869.32 and 1,724.83.

Market trading remained active, with combined turnover for Shanghai and Shenzhen increasing 8 per cent to 584.6 billion yuan from Tuesday.