Daily Report

Fifth day of Hong Kong rises, as Britain votes and traders anticipate Stock Connect test run

Businesses with UK exposure gain, with Standard Chartered shares nearing their highest level this year

PUBLISHED : Thursday, 23 June, 2016, 9:20am
UPDATED : Thursday, 23 June, 2016, 6:56pm

Hong Kong’s stock market extended its gain to five days in a row on Thursday, as confidence remained high that Britain would vote to remain a member of the European Union and speculation grew over the launch of Shenzhen-Hong Kong Stock Connect scheme.

The Hang Seng Index edged ahead another 0.35 per cent, or 73.22 points to 20,868.34, while Hang Seng China Enterprises index, which tracks Hong Kong-listed Chinese companies, rose 0.25 per cent or 21.96 points to 8785.07.

Companies with business exposure to the UK saw their prices continue to rise, recovering from the losses in early June inflicted due to earlier worries over a British exit from the trading block.

CK Hutchison Holdings shares inched up 0.99 per cent to HK$91.65, with Power Assets Holdings shares rising 0.48 to HK$73.5 and Cheung Kong Infrastructure Holdings up 0.61 per cent to HK$73.95.

Standard Chartered PLC shares closed 1.27 per cent higher at HK$63.80, almost hitting their highest level so far this year. HSBC Holdings, also, gained for the fifth day, ending 0.99 per cent higher at HK$50.8.

The long-awaited referendum started on Thursday to decide whether Britain stays in the EU.

The result is expected early on Friday afternoon, Hong Kong-time.

Kingston Lin King-ham, securities brokerage director at AMTD, said he thought the Hong Kong market had been too positive towards the closely fought referendum.

“Even if the vote goes to remain, conflict between Britain and the EU still will exist and we might see more negative events occur in the future.

“That is not good for the European economy and the business of international banks,” Lin said.

Even if the vote goes to remain, conflict between Britain and the EU still will exist. That is not good for the European economy and the business of international banks.
Kingston Lin King-ham, securities brokerage director at AMTD

The positive impact of a so-called “Bremain” has been almost fully reflected in past days, he added.

Renewed optimism over the launch of Shenzhen Hong Kong Stock Connect also helped to fuel the rise in Hong Kong shares.

Hong Kong Exchanges and Clearing said on Wednesday it would launch a systems test runs for the trading link from next Monday.

Dual-listed shares in Shenzhen and Hong Kong were among top gainers.

Car parts manufacturer Zhejiang Shibao gained 2.17 per cent to close at HK$8.93, after its 7.9 per cent rally on Wednesday.

“Speculation on the second link grows, even if it is an old story,” said Castor Pang Wai-sun, Core Pacific Yamaichi head of research.

Coal, agricultural products, and household goods and electronics sectors led the gains, while metals, telecommunication and brokerage house sectors fell.

China Shenhua Energy Company outperformed its blue-chip peers with shares rising 1.93 per cent to HK$13.62, after Deutsche Bank raised its target prices for three coal stocks on expectation that China’s coal price will increase at quicker than expected.

Sport products providers, including Li Ning Company and 361 Degrees International, edged up after

the State Council on Wednesday issued a five-year plan to promote sports nationwide.

That planned government stimulus is expected to result in 1.5 trillion yuan (HK$1.77 trillion) worth of annual consumption in sports products, and convince 700 million people to exercise once a week.

Mainland markets, however, continued quiet.

The Shanghai Composite Index dipped 0.47 per cent or 13.59 points to 2,891.96. The CSI 300, which tracks the large caps listed in Shanghai and Shenzhen, fell 0.53 per cent or 16.64 points to 3,117.32.

The Shenzhen Composite Index dipped 0.32 per cent or 6.17 points to 1,915.21 while the Nasdaq style ChiNext fell 0.34 per cent or 7.33 points to 2,137.49.

Airlines, telecommunication and coal stocks dipped, while agriculture, transportation, liquor and steel sectors dropped.