Hang Seng Index

Stocks move higher as exports rise following 8-month decline

HSBC finishes day lower after incurring penalty from European Commission over Euribor fix

PUBLISHED : Thursday, 08 December, 2016, 9:21am
UPDATED : Thursday, 08 December, 2016, 10:38pm

Hong Kong stocks closed higher on Thursday as a global market recovery lifted risk appetite and China’s trade data for last month pointed to economic stability.

The Hang Seng Index ended 0.27 per cent higher at 22,861.84 and the Hang Seng China Enterprises Index (H shares) gained 0.68 per cent to 9,896.82.

HSBC Holdings remained in the spotlight and was the day’s most heavily traded stock. The stock opened more than 1.3 per cent higher on Thursday morning but quickly reversed gains and slipped to negative territory to end the afternoon 0.23 per cent down at HK$65.35. One day earlier, the European Commission fined HSBC, Crédit Agricole and JPMorgan Chase a combined 485 million (HK$4.06 billion) for participating in a cartel to fix the key Euribor pricing benchmark.

Driven by significantly better than expected foreign trade data, Cosco Ship Port rose 2.86 per cent to close at HK$7.92. Tianjin Port Development also gained 1.67 per cent to HK$1.22.

China’s exports last month increased 0.1 per cent year on year to US$19.7 billion - compared with a 7.3 per cent contraction in October - the first rise in eight months, according to customs data released on Thursday. Imports for the month jumped 6.7 per cent year on year to US$15.2 billion, outpacing a 1.4 per cent rise in October.

China Unicom was among the best performers of the day, up near 1.49 per cent to HK$9.50. China Mobile traded more than 1 per cent higher for most of the day before closing 0.54 per cent higher at HK$84.50. The world’s largest telecom carrier on Wednesday inked a comprehensive strategic partnership with Alibaba Group, the owner of South China Morning Post. Alibaba signed a similar deal with China Unicom last month.

“Hong Kong stocks have continued to rise amid a return in risk appetite and a global markets recovery,” China Merchants Securities (Hong Kong) strategist Vincent Ji said. “And the market also took its cues from strong monthly trade data, which showed signs of a stabilising China’s economy.

Hong Kong stocks have continued to rise amid a return in risk appetite
China Merchants Securities strategist Vincent Ji

“The better-than-expected trade data eased some concerns for China’s economy, [which is] threatened by the yuan’s continuous decline,” Ji added.

Data for last month released on Wednesday showed China’s foreign exchange reserves fell to US$3.05 trillion, a six-year low. The result was a bigger decrease for the month than expected, as most analysts had pegged the reserve stockpile at US$3.06 trillion. The net outflow of US$69.1 billion showed yuan depreciation and capital flight remained big issues.

Markets were also waiting for a statement from the European Central Bank late on Thursday amid expectations that European authorities would extend their asset-buying programme. The optimism also lifted investment sentiment.

“But I do not expect a continuous increase for Hong Kong stocks, as it will face downside risks with a United States rate rise,” Ji added.

The rally in the US stock markets showed the market was still expecting improved corporate profits after president-elect Donald Trump implemented his economic policies, China Yingsheng Capital Group managing director Guo Jiayao said.

The Hang Seng Index was likely to break the resistance level of 23,000, with strong support at 22,600, Guo said.

On Wednesday the International Monetary Fund warned that higher US borrowing costs would automatically flow through to Hong Kong because of its currency peg to the greenback, leaving the city’s high-cost housing market and economy vulnerable.

The Shanghai Composite Index closed 0.21 per cent lower at 3,215.37 while the CSI 300 was down 0.16 per cent to 3,470.14.

The Shenzhen Component Index lost 0.4 per cent to close at 10,812.3 while the Nasdaq style ChiNext fell 0.95 per cent to 2,114.7.

Credit Suisse analyst Chen Li set a target for the Shanghai Composite index at 3,800 on growing corporate profits, saying cyclical industries were expected to outperform next year.

Shares in leading Asian markets traded higher on Thursday. Tokyo’s Nikkei-225 Index gained 1.45 per cent to close at 18,765 , and Sydney’s All Ordinaries added 1.1 per cent to 5,599 , while in Seoul the Kospi jumped 2.08 per cent to 2,031.