Hong Kong, China stocks rise after Huawei’s Meng Wanzhou is freed on bail and possible tariff cut

Stocks in Hong Kong and China rose as US-China trade tensions eased after Beijing signalled it would cut tariffs on imports of US cars and the detained executive of Huawei Technologies was released on bail.

The Hang Seng Index climbed 1.6 per cent, or 415.04 points, to 26,186.71 on Wednesday, the biggest gain in almost two weeks. The Shanghai Composite Index added 0.3 per cent, or 8.06 points, to 2,602.15, but turnover languished near a two-year low.

Asian markets also cheered the news, with major benchmarks from Japan to South Korea and Australia rising at least 1.4 per cent.

China’s State Council, or the cabinet, will review a proposal in the coming days to reduce levies on cars made in the US to 15 per cent from 40 per cent currently, Bloomberg News reported, citing people familiar with the matter. Imports from the US barely account for 5 per cent of China’s car market.

Separately, Huawei’s chief financial officer Sabrina Meng Wanzhou was released on bail on Tuesday by a Canadian court after being arrested on December 1 at the request of the US government.

“Risk sentiment tentatively stabilised,” said Stephen Innes, head of Asia-Pacific trading at Oanda in Singapore. “While markets have been overwhelmed by risk-off sentiment in recent trading sessions, traders were in a much more positive mood today on the back of constructive US-China headlines. Market sentiment was then further supported by positive news on car tariffs.”

Still, gains on the mainland equities were limited, as a report on aggregate financing and money supply released by the central bank late on Tuesday signalled economic growth remains weak. Banks’ off-the-balance-sheet lending continued to contract in November, while medium- and long-term loans, a leading indicator of infrastructure investment, grew at a slower pace, according to brokerages including Shenwan Hongyuan Group.

Chinese traders were also keeping a close watch on the upcoming annual Central Economic Work Conference, in which top Communist Party leaders will gather to set the tone for 2019 policies.

Analysts anticipate more pro-growth measures from the conference. Although no firm date has been set for the conference, it is likely to be held next week.

Property developers led the gains in Hong Kong and the mainland after Citic Securities said a relaxation of housing polices may be imminent amid slowing growth and falling home prices.

China Resources Land rose 6.6 per cent to HK$30 and China Overseas Land & Investment added 5.2 per cent to HK$27.10.

In Shanghai, Everbright Jiabao jumped 6.4 per cent to 6.33 yuan and Metro Land gained 3.6 per cent to 4.29 yuan.

Chinese car parts makers that are exposed to overseas markets also climbed on the back of potential tariff cuts. Kuang-Chi Technologies surged by the 10 per cent daily limit to 9.64 yuan in Shenzhen. Overseas sales account for about 7 per cent of total sales for the maker of car seat slides. Aotecar New Energy Technology, which derives 22 per cent of revenues from overseas, jumped 4.9 per cent to 2.35 yuan.

Hengan International Group, China’s largest producer of sanitary towels and nappies, sank 5.7 per cent to HK$57.05 in Hong Kong before trading was suspended in the morning session. US-based short seller Bonitas Research accused the company of falsifying profits since 2005 and said the stock was “worthless”. Hengan’s spokeswoman declined to comment.

China Longyuan Power Group, Asia’s largest wind farms operator, closed 5.1 per cent lower at HK$5.36 in Hong Kong, after it announced that its former president Li Enyi was detained because of “suspected serious duty crimes”. Li resigned as executive director and president on December 1 stating personal reasons.

The company said that it was not aware of other relevant information regarding his detention, and that its directors have not been asked anything about it by the relevant authorities.

Additional reporting by Eric Ng