Hong Kong stocks edge higher as investors await upbeat corporate earnings

Ping An Insurance and Geely Auto rise at least 1.7pc before full-year earnings results this week. Hang Seng Index closes up 0.1pc at 31,513.76

PUBLISHED : Monday, 19 March, 2018, 9:45am
UPDATED : Monday, 19 March, 2018, 5:49pm

Hong Kong stocks inched ahead on Monday as traders weighed the likely earnings prospects of market heavyweights and the impact of an almost-certain interest rate rise by the Federal Reserve this week.

The Hang Seng Index ended less than 0.1 per cent up, or 11.79 points, at 31,513.76. The Hang Seng China Enterprises Index, or the H-share gauge, slipped 0.1 per cent.

The Hong Kong dollar also fell close to a level that will trigger intervention by the city’s monetary authority, even as an interbank lending rate rose to a five-week high.

The mainland’s Shanghai Composite Index rose for the first time in five days after the Chinese central bank’s vice-governor was endorsed as its new head at the annual legislative meeting – a move viewed by the market as signalling policy continuity.

Fifteen companies on the Hang Seng gauge, including Ping An Insurance Group and Geely Automobile Holdings, are due to release their 2017 annual results this week.

Ping An is looking at a possible 22 per cent profit increase and Geely’s full-year earnings are expected to have surged 95 per cent, according to the estimates polled by Bloomberg.

In the US, there is now an 80 per cent probability the Fed will raise interest rates by 25 basis points after the end of its two-day policy meeting on Wednesday, according to Bloomberg data.

“Markets will keep a close eye on the Fed this week to fine-tune their policy expectations,” said Tai Hui, chief market strategist for Asia-Pacific at JPMorgan Asset Management in Hong Kong.

“Short-term volatility should not deter investors from maintaining diversification and staying invested across risk assets.”

Ping An advanced 2.1 per cent to HK$91.50 (US$11.66) ahead of its 2017 results on Tuesday.

Geely Auto climbed 1.7 per cent to HK$26.90 and Henderson Land Development added 1.1 per cent to HK$53. Their earnings reports are due on Wednesday, while China Mobile gained 0.6 per cent to HK$72.70 before its earnings release on Thursday.

“The market is supported by the buying of heavyweight companies before this week’s announcements,” said Stanley Chan, director of research at Emperor Securities.

“However gains are limited because of uncertainty over White House staff changes and worries of a potential trade war.”

CK Hutchison Holdings slid 1.9 per cent to HK$97.05 after billionaire Li Ka-shing announced on Friday he would step down as chairman and retire from the position of executive director, handling the reins over to his eldest son, Victor Li Tzar Kuoi.

Shares in its affiliates also dropped. CK Asset Holdings lost 0.6 per cent to HK$69.60, Power Assets Holdings slid 2 per cent to HK$69.75 and CK Infrastructure Holdings shed 1.5 per cent to HK$65.90.

The Hong Kong dollar fell to 7.8440 against the greenback, meanwhile, approaching the 7.85 level that will prompt action from the monetary authority.

The drop came even after the 1-month interbank lending rate, also known as Hibor, rose 3.36 basis points to 0.79719 per cent, the highest since February 8.

In the mainland, the Shanghai Composite Index added 0.3 per cent, or 9.37 points, to 3,279.25. The CSI 300 Index of larger companies gained 0.4 per cent and the ChiNext gauge of small-caps jumped 1.2 per cent.

People’s Bank of China Vice-governor Yi Gang was appointed as its new governor on Monday, just at a time when the ruling Communist Party is trying to reduce financial risks and surging debt.

Yi replaces Zhou Xiaochuan, who is retiring after holding the top spot for more than 15 years, as China’s longest-serving central bank governor.

Insurance and health care companies led the gains among mainland stocks. Ping An Insurance climbed 4.7 per cent to 73.81 yuan (US$11.65) and China Pacific Insurance rose 3.1 per cent to 42.04 yuan. Jiangsu Hengrui Medicine gained 5.4 per cent to 86.35 yuan.