Hong Kong stocks rise to three-week high as risk appetite improves and trade war concerns fade
Hong Kong stocks rose for a sixth day, sending the benchmark gauge to its highest level in three weeks, as fears of a global trade war eased and investors’ risk appetite returned with US technology stocks rising to records.
The Hang Seng Index added 0.8 per cent, or 253.53 points, to 31,512.63 at the close on Thursday, capping a 4.8 per cent gain in six days. The Hang Seng China Enterprise Index, or the H-share gauge, advanced 1 per cent. The mainland’s benchmark Shanghai Composite Index fell on Thursday for the first time this week.
The six-day winning streak came amid a recovery in the global risk appetite after the Nasdaq Composite Index rose to a record on Wednesday, and as trade frictions between China and the US seem to have settled temporarily following rounds of talks. The Hang Seng Index was now within a whisper of breaking out of a 2,000-point range that has held back the gauge over the past four months. For any breakout, the Hang Seng Index will need to rise above the top end of the range that stood at 31,601.45, which represents a 0.3 per cent gain from Wednesday’s close.
“The risk-on mode is back among global investors and Hong Kong’s market is apparently benefiting from a recovery in the good sentiment towards equities,” said Wei Wei, a trader at Huaxi Securities in Shanghai. “The trade spat has seemingly been resolved for the time being and the probability of a trade war looks pretty low in the short term.”
Geely Automobile Holdings rallied 3.4 per cent to HK$24.05, becoming the biggest gainer on the Hang Seng Index after the carmaker posted a 61 per cent increase in vehicle sales in May.
Hong Kong Exchanges and Clearing, the operator of the city’s bourse, added 1.9 per cent to HK$263.40 after the Hong Kong government said it boosted its shareholding in the company to 6 per cent.
China Mengniu Dairy, an official sponsor of the Fifa World Cup that will kick off in Russia next Thursday, rose 2.1 per cent for a fourth straight day of gains to record HK$29.40.
GCL Poly Energy Holdings jumped 9.2 per cent to HK$0.83. The world’s largest maker of solar panel materials polysilicon and solar wafer agreed to sell over half of its principal subsidiary for up to 12.75 billion yuan (US$1.99 billion) to state-backed power equipment maker Shanghai Electric Group. Shares of Shanghai Electric shed 1.3 per cent to HK$2.98.
In mainland trading, the Shanghai Composite Index dropped 0.2 per cent, or 5.68 points, to 3,109.50. The large-cap CSI 300 Index also slipped 0.2 per cent and the ChiNext gauge of smaller companies sank 0.7 per cent.
Losses in healthcare stocks, the best-performing sector this year that has recently borne the brunt of the sell-off because of excessive gains, outweighed gains in brokerages.
A gauge tracking pharmaceutical companies on the CSI 300 declined 1.6 per cent for the biggest drop among the industry groups, trimming its gain to 25 per cent this year. Aier Eye Hospital Group sank 4.5 per cent to 30.94 yuan, paring its advance in 2018 to 51 per cent. Meinian Onehealth Healthcare Holdings lost 3.8 per cent to 27.80 yuan and Shanghai Pharmaceuticals Holding slid 3.6 per cent to 25.35 yuan.
Industrial Securities led brokerages higher after the securities regulator released nine set of general rules on issuance of Chinese depository receipts by overseas-registered companies, a move that will provide the sector with a new source of revenue. The stock surged 4.3 per cent to 6.05 yuan. Zheshang Securities climbed 2 per cent to 11.02 yuan.