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Stocks

Hong Kong stocks rally for ninth day; Guangzhou R&F and Sunac China advance on Wanda deal

Hang Seng Index rose 0.3 per cent, or 68.05 points while the Shanghai Composite Index adds 0.5 per cent to 3,747.88

PUBLISHED : Thursday, 20 July, 2017, 9:10am
UPDATED : Thursday, 20 July, 2017, 10:24pm

Hong Kong’s Hang Seng Index rose for a ninth consecutive day on Thursday, as property developers Sunac China and Guangzhou R&F surged after Wanda Group said it had changed its previous asset disposal plan.

The Hang Seng Index rose 0.3 per cent, or 68.05 points, to 26,740.21, The Hang Seng China Enterprises Index, or the H-share gauge of Chinese companies trading in the city, edged down 0.1 per cent, or 13.69 points, to 10,846.83.

Mainland equities increased for a third day, with the Shanghai Composite Index adding 0.5 per cent, or 18.13 points, to 3,747.88. The ChiNext gauge of smaller firms rose 0.2 per cent.

Property developer Wanda, owned by billionaire Wang Jianlin, will now sell 77 hotels for 19.9 billion yuan to Guangzhou R&F, while Sunac China, controlled by tycoon Sun Hongbin, will now buy 13 tourism-related projects from Wanda for 43.8 billion yuan, scaling back from a previous 63.7 billion yuan acquisition.

The three companies made the announcements at a joint press conference in Beijing on Wednesday.

Sunac’s Sun said the altered deal will reduce the company’s debt and free up more cash in an explanation to why he had dropped the plan to buy Wanda’s hotels.

“The asset purchases are good for Sunac and R&G as that will be helpful to expand their business scopes,” said Ken Chen, a strategist at KGI Securities in Shanghai.

Sunac China surged 14.2 per cent to HK$19.64 yuan on Thursday and Guangzhou R&F climbed 6.8 per cent.

Hong Kong Exchanges and Clearing led advances on Thursday, rising 4 per cent to HK$221.4 as Goldman Sachs lifted the target price of the stock by 2.1 per cent to HK$245. Blue chip AAC Technologies also outperformed, surging 5.8 per cent to a new record of HK$123.6.

A weaker US dollar and signs of a stabilising Chinese economy have spurred buying from overseas and mainland investors, fuelling a 22 per cent gain in the Hang Seng Index this year.

“Adequate liquidity from overseas and a strong Chinese economy have benefited Hong Kong stocks. And there’s probably still room for a further increase,” said Chen.

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