Hong Kong stocks flat, Fosun volatile after surprise CEO resignation

Hang Seng Index edged up 0.2 per cent, or 46 points, to 24,392, while the Hang Seng China Enterprises Index gained 0.1 per cent, or 11 points, to 10,437

PUBLISHED : Wednesday, 29 March, 2017, 10:22am
UPDATED : Wednesday, 29 March, 2017, 10:56pm

Hong Kong stocks closed flat on Wednesday while mainland China shares extended their losing streak for the third day.

The Hang Seng Index edged up 0.2 per cent, or 46 points, to 24,392 while the Hang Seng China Enterprises Index added 0.1 per cent, or 11 points, to 10,437.

The rebound of the US Dow Jones Industrial Average overnight failed to lift sentiment on the Hong Kong bourse, which is expected to remain relatively quiet in the short term, said Hannah Li, strategist for UOB Kay Hian.

“Hong Kong shares might fluctuate within a narrow range for a while,” she said. “Now people might focus more on individual shares instead of on the broader index.”

While the market largely stayed flat, Fosun International saw a volatile day of trading after it announced the surprise departure of its chief executive Liang Xinjun, despite reporting a strong rise in profits.

The investment conglomerate gained 2.3 per cent to HK$11.74 at the start of trading, but soon fell back to touch a low of HK$11.36, down 1 per cent. By the close the stock had recovered its losses to trade 2.09 per cent higher at HK$11.72.

Meanwhile, Shanghai Fosun Pharmaceutical, a subsidiary of Fosun Group, closed 3.5 per cent lower to HK$28, while its Shanghai-listed shares shed 2.3 per cent to 27.5 yuan at the close.

Hong Kong shares might fluctuate within a narrow range for a while
Hannah Li, strategist for UOB Kay Hian

Liang, also Fosun’s vice chairman, has been replaced as CEO by Wang Qunbin, another co-founder, according to an exchange filing on Tuesday night. He was stepping down for “health reasons”, the statement said.

“I’m very shocked. But Xinjun thought it over and insisted on leaving, so it was a joint decision,” Fosun chairman Guo Guangchang said in a public letter posted on the company’s WeChat account on Tuesday.

The filing also said Ding Guoqi, senior vice president and a board member, had stepped down “in order to spend more time with family”.

In a separate filing, Fosun International reported its 2016 net profit had increased 28 per cent from the previous year to 10.3 billion yuan, although revenues fell 6 per cent to 74 billion yuan.

Online major Tencent closed 0.9 per cent higher to HK$228 after it said it bought a 5 per cent stake in US electric car maker Tesla for US$1.78 billion.

Hong Kong based AAC Technologies lost 2.4 per cent to close at HK$93, leading the decliners, followed by China’ Geely Auto and China Resources Land, which shed 2.4 per cent and 1.6 per cent respectively.

Agricultural Bank of China and Bank of Communications closed up at HK$3.60 and HK$6.09 respectively after the two lenders reported increases in their annual earnings for last year.

On the mainland, the Shanghai Composite Index closed 0.4 per cent lower to 3,241 while the large-cap CSI300 shed 0.1 per cent to 3,465.

The Shenzhen Composite Index extended losses by sliding 0.7 per cent to 2,019 while the ChiNext start-up board index closed down 0.8 per cent to 1,929

Stocks linked to China’s ambitious “one belt, one road” initiative surged despite the broad market losses, with shipping and infrastructure sectors doing especially well. China West Construction Co reached its daily limit after its shares rose 10 per cent to 20.09 yuan, while China Sinoma International Engineering surged 5 per cent to 11.07 yuan at the close.

On Tuesday night, US stocks advanced after a gauge of consumer confidence in March rose to the highest level in more than 16 years.

Technology giant Apple climbed 2.1 per cent to a record closing high, pushing its market capitalisation to US$755.74 billion.