Hong Kong’s Hang Seng Index closes above 24,000 as property stocks rally

Data shows home prices in mainland cities continue to rise, while Hong Kong government holds back on new measures to cool down property market

PUBLISHED : Wednesday, 22 February, 2017, 9:58am
UPDATED : Wednesday, 22 February, 2017, 10:03pm

A surge in property stocks lifted Hong Kong’s main benchmark index above the 24,000 threshold again, amid expectations that home prices will continue to rise.

The Hang Seng Index closed at 24,202 on Wednesday, up 1 per cent. The Hang Seng China Enterprises Index advanced 1.2 per cent, to 10,537.6, led by property and shipping sectors.

Property stocks rallied as data showed home prices in mainland Chinese cities continued to rise. Separately, the Hong Kong government didn’t announce any new measures in its budget package to cool down the housing market, which was seen as good news for local developers, said Ivan Li Sing-yeung, head of research at Sinopac Securities.

China Resources Land was the top gainer among blue chips, jumping 5 per cent to HK$22, its best closing level since September 29 last year. China Overseas Land & Investment also advanced 3.6 per cent to HK$24.5.

The average new home price index for 70 major Chinese cities rose 12.2 per cent year on year in January, marking the 16th straight monthly rise, according to calculations by Reutersbased on data released Wednesday by China’s National Bureau of Statistics. Nonetheless, the increase has continued to narrow for four months in a row, compared with December’s 12.4 per cent year-on-year rise.

“Mainland property stocks have lagged behind the recent rally of the Hong Kong benchmarks. As the data showed a steadily rising price trend and developers also reported good sales, the sector found some rising momentum,” Li said.

Mainland property stocks have lagged behind the recent rally of the Hong Kong benchmarks
Ivan Li Sing-yeung, Sinopac Securities

Hong Kong real estate developer New World Development shares rose 3.5 per cent to HK$9.8 after it posted HK$4.7 billion of contracted sales in the Hong Kong market for the six months ended December 31.

When including sales of residential units at The Pavila Bay in January, its attributable contracted sales in Hong Kong would have exceeded its annual sales target of HK$10 billion for the financial year ended June 30, 2017, the company said in the filing to the Hong Kong bourse.

The Wharf (Holdings) Limited, another local developer, increased 4 per cent to HK$62.7.

In his first budget unveiled on Wednesday, newly appointed financial secretary Paul Chan Mo-po said the private sector will on average build about 20,300 private flats each year in the next five years, which would be an increase of about 70 per cent over the yearly average in the past five years.

The supply is still lower than expected and there aren’t any cooling measures to suppress home prices, factors which could both support local property stocks, Li said.

Among other movers on Wednesday, the shipping sector jumped sharply amid expectations of an industry recovery. Cosco Shipping surged 10.1 per cent to HK$3.9, its best level since August 2015, while Sinotrans gained 6.3 per cent to HK$3.7.

HSBC slid a further 0.15 per cent to HK$65.5 after posting poor results on Tuesday. Insurer AIA fell 0.1 per cent to HK$49.

GME Group Holdings, a construction firm that debuted on Hong Kong’s Growth Enterprise Market board on Wednesday, had its shares suspended from trading on orders from the Securities and Futures Commission, after the stock soared more than 542 per cent in the morning.

Hong Kong regulator SFC orders second board listing to suspend trading after shares soar 542pc

On the Chinese mainland, the cement, construction materials and engineering sectors all pushed up the benchmarks.

The Shanghai Composite Index edged up 0.2 per cent to 3,261.2, extending its winning streak for three consecutive days, and refreshing its best level since December 1 last year. The large-cap CSI300 also recovered from a slip in the morning to close 0.2 per cent higher at 3,489.8.

The Shenzhen Component Index rose 0.4 per cent to 10,444.4, while the startup ChiNext index fell 0.1 per cent to 1,920.