Hong Kong stocks tick higher, on fresh stimulus hopes

After Tuesday’s pause in gains, Hang Seng returns to winning ways

PUBLISHED : Wednesday, 20 July, 2016, 9:19am
UPDATED : Wednesday, 20 July, 2016, 10:42pm

Hong Kong stocks reverted to an upward trend on Wednesday, as investors bet on a fresh round of global central bank stimulus, said market watchers.

The Hang Seng Index increased 0.97 per cent or 209.28 points to 21,882.48. The Hang Seng China Enterprises Index gained 0.38 per cent or 34.32 points to 9,023.11.

Market turnover increased to HK$ 58.53 billion, the highest level this week, with telecommunication and support services sectors outperforming, while oil and gas and mining stocks dropped.

All top five active shares in Hong Kong jumped on Wednesday, with Lenovo Group leading the gainers, up 3.17 per cent to HK$5.21 as mainland media reported it is developing a mobile game with augmented reality.

Almost all blue chips gained, too, with China Resources Power leading the increase, up 4.9 per cent to close at HK$12.0.

Hong Kong local property developers were also among the biggest movers.

Wharf Holdings jumped 3.66 per cent to HK$ 52.35, while Henderson Land Development added 3.24 per cent to HK$ 46.25 and Sino Land increased 2.04 per cent to HK$ 13.98.

Tsui Wah Holdings shares jumped 14.6 per cent to HK$1.57 in resumed trade on Wednesday, after its major shareholders were approached by a third party in respect of a possible sale of the restaurant chain operator, which forced its annual net profit to tumble more than 50 per cent year on year.

Wilson Tang, equities specialist head at DBS Bank Hong Kong said the recent rally in Hong Kong stocks come from investor expectations of fresh global central bank stimulus, including by the Bank of Japan and Bank of England.

Investors were also sounding a cautiously optimistic note ahead of the European Central Bank’s meeting Thursday, he added.

Investors still seek returns with a prudential attitude. Bonds are not appealing as the yield is falling. So we see it is mostly the big blue chips that shored up the benchmark
Linus Yip Sheung-chi, First Shanghai Securities chief strategist

Linus Yip Sheung-chi, First Shanghai Securities chief strategist, said investors have little option but to take on risk in the equity market amid the low interest rate environment globally.

“Investors still seek returns with a prudential attitude. Bonds are not appealing as the yield is falling. So we see it is mostly the big blue chips that shored up the benchmark,” Yip said.

Hong Kong stocks registered a moderate loss on Tuesday, their first decline in seven days.

“After Tuesday’s profit-taking, there is a chance to see the benchmark reach 22,000 this week,” Yip said.

Tang from DBS agreed, saying: “The bond market is crowded and not that appealing these days, thus investment will shift into equities.”

He added local property developers are still undervalued, but warned investors should be cautious on the utility sector.

Yip said market performance may depend more on future on the sentiment of investors in the absence of any solid economic fundamentals.

The International Monetary Fund on Tuesday raised its projection of China’s economic growth this year to 6.6 per cent from 6.5 per cent, while it lowered its global growth estimate by 0.1 percentage points from its April’s forecast to 3.1 per cent.

Mainland Chinese stocks traded flat to lower. The Shanghai Composite Index fell 0.29 per cent to 3,027.90 while the CSI 300 — which tracks large companies listed in Shanghai and Shenzhen — fell 0.33 per cent to 3,237.61. The Shenzhen Composite Index inched up 0.07 per cent to 2035.85, while the Nasdaq style ChiNext lost 0.23 per cent or 5.18 points to 2268.53.

China Vanke’s A-shares jumped 0.98 per cent on Wednesday morning after it filed an 8,000-word statement on Tuesday, accusing its major shareholder Baoneng of breaching a number of regulations, including illegal fundraising. The stock had retreated by the close, ending down 0.18 per cent at 17.8 yuan.