China stocks rise on stronger economic data, while Hong Kong stocks retreat ahead of Trump inauguration

PUBLISHED : Friday, 20 January, 2017, 9:17am
UPDATED : Friday, 20 January, 2017, 10:29pm

Hong Kong and mainland stocks ended mixed on Friday as China reported faster than expected fourth quarter GDP growth while worries about possible interest rate rises in the US weighed on the property sector.

The benchmark Hang Seng Index lost 0.7 per cent, or 164 points, to 22,885 at the close, while the China Enterprises Index lost 0.8 per cent to 9,715.

The benchmark index lost a modest 0.2 per cent this week.

Property developers and utilities firms retreated more than 0.8 per cent on Friday after the Federal Reserve chairwoman Janet Yellen said on Thursday that the US central bank should gradually raise interest rates, noting the risk of the US economy overheating.

The property sector led the decline as CK Property slumped 2.2 per cent to HK$50.95 per share.

Kunlun Energy Company was the best performer in the afternoon session among the 50 blue chips, with its shares rising 3.2 per cent to HK$6.16. However, offshore oil producer CNOOC performed the worst among blue chips, closing down 2 per cent to HK$9.8, after the management forecast a lower output and rising capital expenditures in 2017.

The Shanghai Composite Index added 0.7 per cent to close at 3,123 while the blue-chip CSI300 index rose 0.8 per cent to 3,354.

For the week, the CSI300 gained 1.1 per cent, while Shanghai benchmark was up 0.3 per cent.

Among leading sectors, financials took heart after the People’s Bank of China lowered the ratio of cash that banks must set aside as reserves, in an effort to ease seasonal liquidity tightness ahead of the Lunar New Year holiday. The healthcare sector was another strong gainer.

The PBOC said on their official Weibo account Friday that it has offered temporary liquidity facilities to some banks with a duration of 28 days. The operation will provide more effective liquidity transmission before the week-long Lunar New Year holidays, it said.

“We don’t have to take the market moves on the Hong Kong bourse too seriously,” said Alex Wong Kwok-ying, director from Ample Finance Group, adding that it was mostly a quiet trading day on Friday as people are still awaiting Donald Trump’s inauguration.

“Apparently the mainland markets were not that sensitive about the inauguration as we can see they ended up higher,” he said.

He said that the moves on the markets next week would be more indicative of investor sentiment.

“Now it was mostly just profit-taking at this moment on the market.”

China’s gross domestic product (GDP) grew 6.8 per cent year-on-year in the fourth quarter, slightly better than market estimates, according to data from the National Bureau of Statistics on Friday. For the full year, the GDP growth reached 6.7 per cent, meeting expectations.

The People’s Bank of China injected 1.13 trillion yuan (HK$1.28 trillion) of liquidity this week into the banking system through open market operations, the largest weekly injection in history, which could give support to mainland equity market.

Among market movers, Hong Kong-based shipping carrier Orient Overseas (International) fell 9.21 per cent to HK$40.9, after the company, the parent of OOCL, said in a release to the Hong Kong bourse on Friday that it was not aware of any bid being made for the liner.

“The company wishes to clarify that the company and OOCL is not aware of, nor is it involved in any bid relating to the company or OOCL,” Orient said in a statement to the Hong Kong Stock Exchange, adding it had noted the reports about a “potential bid”.

Earlier this week financial media reported that the company’s larger rival China COSCO Shipping Corp had been in talks with Orient Overseas for a possible acquisition for several months. The news had pushed Orient’s shares higher by 15 per cent in the past two days to hit the highest level since 2015.

Leshi Internet Information & Technology Corp Beijing, the listed arm of LeEco, rose 7.08 per cent to 40.83 yuan in Shenzhen, the highest since November 2, after its share trading was resumed. LeEco’s chief executive Jia Yueting had apologised on his earlier remarks about pushing the company’s share prices higher to 100 yuan.

Sealand Securities fell 6.5 per cent to 6.52 yuan in Shenzhen, after resuming trading in the wake of a scandal about bonds with forged seals.