Hong Kong stocks notch up gains, led by China Vanke, oil firms

Mainland shares end lower after sentiment nosedives following dismal export data

PUBLISHED : Friday, 13 January, 2017, 9:23am
UPDATED : Friday, 13 January, 2017, 9:51pm

Hong Kong stocks ended the second trading week of 2017 on an upbeat note, edging closer to the recent high of 23,147.07 points on November 1, with oil giants and China Vanke leading the way. But trading volumes decreased before the upcoming Lunar New Year holidays.

However, on the mainland, equities declined for the fourth straight day on Friday, reversing almost all the gains since the start of the year, after data showed China’s exports fell more than expected in dollar terms during December.

Hong Kong’s benchmark Hang Seng Index closed up 0.5 per cent on Friday at 22,937.38, the highest level since November 1. For the week, it advanced 1.9 per cent, marking the third consecutive week of gains. Since the start of this year, it has jumped 4.3 per cent.

The Hang Seng China Enterprises, or the H-shares index, gained 0.7 per cent to close at 9,787.34 points. Daily turnover on the Hong Kong bourse declined 10 per cent from Thursday to HK$57 billion.

“The incoming US president Donald Trump is expected to take a firm stance on China, especially in the early period of his presidency,” said Victor Au, chief operating officer of Delta Asia Securities. Hong Kong stocks could see some downside pressure during the first quarter of the Trump presidency, he said.

“The yuan has stabilised recently against the US dollar, easing concerns for capital outflows. This is a positive for Hong Kong stocks,” said Li Ning, an analyst from Victory Securities.

The greenback and US treasury yields have retreated from the post-election highs, as uncertainties still persist over Trump’s policies. A weaker US dollar has helped drive capital inflows into emerging markets.

Among the top gainers on Friday were oil stocks, with Sinopec jumping 3.6 per cent to HK$6.09. PetroChina rose 2.6 per cent to 6.28 yuan, while Cnooc rose 2.4 per cent to 9.96 yuan. Meanwhile crude futures settled higher on Thursday, boosted by signs of output reductions by major oil producers and strong demand growth from China.

Residential property developer China Vanke surged 5.7 per cent to HK$19.66 in Hong Kong. Its Shenzhen-traded shares also rallied 6.9 per cent to 21.81 yuan, after state-owned Shenzhen Metro said it had purchased a 15 per cent stake in the company.

On the mainland, the Shanghai Composite Index fell for a fourth straight day and finished down 0.2 per cent at 3,112.76 points. It closed the week lower by 1.3 per cent. Since the start of the year, the index only gained 0.3 per cent. Combined turnover for the Shanghai and Shenzhen bourses dropped 6 per cent from Thursday to 384 billion yuan (HK$431.7 billion).

Sentiment nosedived on the mainland after government data showed that China’s December exports fell 6.1 per cent year-on-year in dollar terms, worser than market expectations. Nonetheless, imports grew 3.1 per cent year-on-year in December.

“The slowdown (in exports) is disappointing given signs from recent business surveys, and from Korea and Taiwan’s export data, that global demand continued to strengthen in December, ” said Julian Evans-Pritchard, an economist for Capital Economics in a research note.

“Looking ahead, it is hard to see conditions becoming much more favourable to Chinese trade than they already are,” he said, adding that the likelihood of a trade spat between China and the US has risen in recent weeks following Trump’s appointment of hardliners to lead US trade policy.

Exports-related shares weakened, as Shanghai Material Trading sank 7.4 per cent to 18.07 yuan, and China National Complete Import & Export plunged 7 per cent to 19.38 yuan.