China stock market

Hong Kong stocks end higher on strong company quarterly earnings

Positive economic data from China also helped lift financial stocks, with the Hang Seng Index paring its losses for the week

PUBLISHED : Friday, 27 October, 2017, 9:12am
UPDATED : Friday, 27 October, 2017, 10:03pm

Hong Kong stocks rose on Friday, paring losses for the week, as financial companies climbed thanks to strong quarterly earnings and solid economic data from China.

The Hang Seng Index gained 0.8 per cent, or 236.47 points, to 28,438.85, trimming its loss to 0.2 per cent for the week, but still the first weekly loss in a month. The Hang Seng China Enterprises Index advanced 1.7 per cent, or 197.36 points, to 11,643.57, the highest level since July 2015.

The Hang Seng Index has been consolidating after it rose to an almost 10-year high last week. It is the best-performing among Asia’s major stock markets this year with a gain of 29 per cent. Turnover stood at HK$100.5 billion, up from HK$84.2 billion on Thursday.

“Hong Kong stocks are catching up with rising US stocks after dipping for a few days,” said Castor Pang Wai-sun, the head of research at Core Pacific-Yamaichi. “Earnings reports from major banks are also better than expected.”

Financial companies led the advance, with the subindex rising 1.8 per cent and contributing 677.7 points to the Hang Seng Index.

A bounce in September profits at Chinese industrial companies announced on Friday spurred optimism that the asset quality of Chinese banks will improve, said Wang Chen, a partner with Xufunds Investment Management in Shanghai.

“Investors are following the earnings theme and they are looking for stocks with solid earnings,” said Wang. “The good trend on the Hong Kong market is still there and it will set a new high any time soon.”

Strong quarterly earnings posted by China Construction Bank and China Life Insurance also lifted the financial sector. Construction Bank gained 3.3 per cent and China Life rose 2.8 per cent.

ICBC advanced 4 per cent, and Bank of China climbed 3 per cent, ahead of the release of their third-quarter results on Monday.

Property developers bucked the trend and edged down, with Sunac China declining 5.5 per cent after its chairman was penalised by the Hong Kong stock exchange operator on Thursday for not meeting disclosure rules during a takeover deal in 2015.

Geely Automobile fell 3.6 per cent, after announcing on Thursday it would sell all its stake in car brand Lynk & Co. Great Wall Motor declined 2.8 per cent after reporting on Friday an 80 per cent plunge in third-quarter profit.

AAC Technologies Holdings, which derives almost half of its revenues from Apple, rose 1 per cent, as pre-orders for Apple’s much-anticipated flagship iPhone X began on Friday.

China’s Shanghai Composite Index added 0.3 per cent, or 9.25 points, to 3,416.81, bringing gains for the week to 1.1 per cent. The CSI 300 Index, which tracks large companies listed in Shanghai and Shenzhen, advanced 0.7 per cent, or 28.39 points, to 4,021.97.

The 542 companies on the 1,307-member Shanghai Composite that have already released third-quarter results posted an average earnings increase of 22 per cent, according to data compiled by Bloomberg. Second-quarter earnings growth was 11 per cent, the data showed.

Elsewhere in Asia, Tokyo’s Nikkei 225 was up 1.2 per cent. South Korea’s Kospi rose 0.6 per cent, while Australia’s All Ordinaries fell 0.2 per cent.