Hong Kong stocks snap six-day losing streak as prospect of fresh US-China trade talks boosts sentiment
China and Hong Kong stocks rose for the first time this week after the Trump administration proposed a new round of trade talks, raising optimism of a detente in the ongoing trade war between the world’s two largest economies.
The Hang Seng Index rallied 2.5 per cent, or 669.45 points, to 27,014.49 by market close, after falling for six days, while the Hang Seng Composite Index gained 2.6 per cent, or 264.24 points, to 10,503.01.
On the mainland the benchmark Shanghai Composite Index rebounded 1.2 per cent, or 30.47 points, to 2,686.58. On Wednesday it had dropped to just above a low set in January 2016. If breached, it would have taken the gauge to a four-year low.
The CSI 300, which tracks large companies, gained 1.1 per cent, or 34.54 points, to 3,236.57, while the ChiNext gauge of small-caps rose 0.4 per cent, or 5.48 points, to 1,391.28.
“It is a very much oversold market and the resumption of talks gives hope: not in the near term, but gradually over the next few months there could be light at the end of the tunnel,” said Louis Tse Ming-kwong, managing director of VC Asset Management.
Senior officials headed by US Treasury Secretary Steven Mnuchin extended an invitation to their Chinese counterparts for a new round of trade talks to be held later this month in Washington, according to a report from The Wall Street Journal.
The invitation came after over 85 US industry groups formed a coalition on Wednesday to publicly fight President Donald Trump on trade tariffs.
The olive branch granted by the US provided respite to struggling equities on the Chinese mainland and Hong Kong, as Trump is threatening tariffs on an additional US$276 billion of Chinese goods beyond the proposed US$200 billion.
The Hang Seng Index entered a bear market for the first time since 2015 this week, and the Shanghai Composite was close to breaching a 2016 low in the aftermath of a rout that erased US$5 trillion in market value.
“Markets should welcome the news of a possible resumption of high level trade talks and a new round of dialogue would suggest the tariff implementation of the next round of US$200 billion on Chinese exports could be pushed back,” said Tai Hui, a strategist at JPMorgan Asset Management in Hong Kong.
Casino operators led the pack of gainers in Hong Kong. Sands China jumped 6.6 per cent to HK$33.80 and Galaxy Entertainment Group added 5 per cent to HK$48.00. Wynn Macau rose 5.6 per cent to HK$18.08, and MGM China gained 5.2 per cent to HK$11.74.
Index heavyweight Tencent Holdings rebounded 5 per cent to HK$323.80 after spending a combined HK$85 million (US$10.8 million) buying back its shares over three trading days in the past week.
Apple suppliers Sunny Optical Technology (Group) and AAC Technologies Holdings rose 6 per cent to HK$93.00 and 0.3 per cent to HK$78.10, respectively after the US company unveiled a trio of new iPhones including the XS Max, its most expensive phone ever.
Mainland banks rallied alongside the rebound.
China Construction Bank gained 3.3 per cent to HK$6.56, while ICBC rose 2.8 per cent to HK$5.5. Bank of China added 1.4 per cent to HK$35.95, and HSBC Holdings and Hang Seng Bank rose 1.4 per cent to HK$67.55 and 1.3 per cent to HK$207.60 respectively.