Hong Kong stocks gain as shares linked to new economic zone in Hebei surge
Hong Kong stocks kicked off the second quarter on a positive note, reversing two days of losses.
The city’s benchmark Hang Seng Index closed 0.6 per cent higher at 24,261.5 on Monday, while the Hang Seng China Enterprises Index gained 0.4 per cent to 10,314.5. Trading turnover was HK$62.47 billion.
Stock markets in mainland China were closed for a public holiday.
Infrastructure-related stocks surged on hopes of government stimulus after Beijing announced plans to set up Xiongan New Area, a special economic zone in Hebei province.
Beijing-based cement provider BBMG Corporation was the biggest gainer on Hong Kong’s main board, surging 34.7 per cent to HK$4.4. Jiang Deyi, chairman of BBMG, said in an announcement to the stock exchange that he was unaware of “any reasons for these price or volume movements” or of “any inside information that needs to be disclosed.”
Hebei-based China Suntien Green Energy Corporation jumped 12 per cent to HK$1.7. Tianjin Port Development Holdings surged 15.9 per cent to close at HK$1.53.
The rally followed a Xinhua report on Saturday that President Xi Jinping will push to create a new district in northern Hebei province – about 160 kilometres south of Beijing – to rival the two special economic zones founded in southern China by his predecessors, Deng Xiaoping and Jiang Zemin.
Hebei-based developer China VAST Industrial Urban Development Company surged 11.5 per cent to HK$3.5, even though the Hebei government prohibited all home sale activities after the Xinhua report, amid concerns of home price speculation.
As southbound trading under the stock connect scheme was closed on Monday for the public holiday, the rally of stocks that are likely to benefit from the creation of Xiongan district mainly reflected the sentiment of Hong Kong and foreign investors, Sam Chi-yung, senior strategist of South China Research said.
“A fundamental change to those stocks is expected as the creation of a new area would boost property and construction industries in the region. But a 30 per cent change is a bit exaggerated,” Sam said.
“It remains to be seen how the southbound capital and mainland investors react to the news once [mainland stock] trading resumes.”
Kunlun Energy Company was the best performer among blue chips, rising 7.4 per cent to HK$7.7.
Yanzhou Coal Mining Company shares surged 5.1 per cent to HK$6.4 after it posted 2016 net profit of 1.65 billion yuan (US$239.7 billion).
Great Wall Motor Company closed 5.2 per cent higher at HK$9.3, the best performer among H-shares.
Macau casino operators also joined the rally after the city reported an 18 per cent revenue increase in March. Macau government data showed that gaming revenue rose to 21.2 billion patacas (US$2.6 billion), the eighth monthly increase.
Galaxy Entertainment jumped 1.1 per cent to close at HK$43, but Sands China erased its early gains to close flat at HK$36.
Coolpad Group, a telecommunications equipment company headquartered in Shenzhen, halted trading of its Hong Kong shares and said that it will delay the publication of its annual results, as it “requires more time to provide information requested by the auditor”, according to a statement filed to the Hong Kong stock exchange.
Mainland stock markets are closed on Monday and Tuesday for the Ching Ming Festival holidays and will resume trading on Wednesday. Hong Kong’s stock market will be closed Tuesday for a public holiday.
Over the weekend, China’s Caixin Markit Manufacturing Purchasing Managers’ index for March came in at 51.2, missing market expectations of 51.6 and down from 51.7 in February. It managed to stay above the 50 threshold which separates expansion from contraction for the eighth straight month.
More economic data are scheduled for release later this week, including China’s foreign exchange reserves for March and the Caixin Markit PMI index for the non-manufacturing sector.
President Xi Jinping is scheduled to meet US President Donald Trump on Thursday and Friday during a state visit to the United States.