Hong Kong Stock Exchange

Hong Kong shares rebound from two-week low, but mainland holiday keeps turnover slim

Analysts expect the market to continue moving higher, although caution is likely to set in later week ahead of US new non-farm payrolls data due out Friday

PUBLISHED : Monday, 03 October, 2016, 9:25am
UPDATED : Monday, 03 October, 2016, 9:37pm

Hong Kong stocks surged from a two-week low to close higher on Monday triggered by positive sentiment in the United States, but a week-long holiday in mainland China meant turnover was slim.

The Hang Seng Index finished Monday trading up 1.23 per cent or 287.28 points to 23,584.43, while the Hang Seng China Enterprises Index jumped 1.06 per cent or 101.44 points to 9,683.37.

The market recovered much of its loss from Friday trading when the Hang Seng slipped 1.86 per cent.

Mainland China markets are closed this week for the National Holiday, and the lack of investment flows from the across the border meant turnover was slim, with a HK$48.64 billion main board market turnover, VC Brokerage director Louis Tse Ming-kwong said.

On Friday, market turnover was at HK$70.4 billion.

Tse expected the market to continue moving higher on Tuesday and Wednesday before growing more jittery ahead of the Friday’s release of the US non-farm payrolls data for September which will provide clues as to the timing of the next interest rate hike in the US and the major focus of markets.

“Towards the end of this week, a more cautious mood will come in,” he said.

Alex Wong Kwok-ying, asset management director at Ample Capital, said the easing of concerns over Deutsche Bank’s future was the major cause of improved sentiment, especially in the banking and insurance sectors.

The shares of Germany’s largest lender rebounded on Friday from a 30-year low caused by fears it could be crippled by a US$14 billion penalty from US authorities for mis-selling mortgage-backed bonds in the lead up to the financial crisis of 2008. Now, major German business leaders are reported to have thrown their weight behind Deutsche Bank, calming fears of market contagion.

HSBC closed up $1.58 per cent to HK$58.05 while Bank of East Asia rose 3.50 per cent to HK$32.55.

Many industries saw gains on Monday, with coal stocks among the big movers. Shougang Resources and Mongol Mining both hit 52-week highs thanks to the government’s efforts to cut overcapacity, Tse said.

Macau casino operators also saw gains, with the industry moving up 1.15 per cent as a whole, buoyed by better-than-expected gambling revenue for September.

Monthly gross revenue was up 7.4 per cent from a year earlier to 18.396 billion patacas the second consecutive monthly gain, according to data from Macau’s government.

Galaxy Entertainment Group moved up 2.91 per cent to close at HK$30.05 while Sands China jumped 1.78 per cent to HK$34.25.

Wong said he expects Chinese investors to buy shares in mainland property companies listed in Hong Kong through the Shanghai Hong Kong stock connect after the holiday break. “I expect the share prices will rebound next week when the mainland stock market reopens Monday.”

Elsewhere around Asia, Tokyo’s Nikkei 225 closed up 0.90 per cent, and Sydney’s S&P/ASX 200 jumped 0.78 per cent.