Hong Kong Stock Exchange

Hong Kong stocks sag before Easter holidays; geopolitical jitters persist

PUBLISHED : Thursday, 13 April, 2017, 9:27am
UPDATED : Thursday, 13 April, 2017, 10:21pm

Hong Kong stocks ended Thursday’s choppy session lower amid thin trade as investors turned away from risky assets before the Easter holidays.

Escalating tensions on the Korean peninsula also kept them on edge.

The Hang Seng Index struggled to keep its head above water for most of the session. It closed the day down 0.2 per cent at 24,261.66 points. For the week, the index nudged lower by less than 0.1 per cent.

Meanwhile, the Hang Seng China Enterprises Index, known as the H-share index, ended fractionally lower, down 0.04 per cent at 10,204.34 points.

Turnover decreased nearly 7 per cent to HK$67 billion.

Hong Kong stock markets will shut on Friday and Monday for the Easter holidays and reopen on Tuesday.

“Investors are kind of on hold before the long holidays while they are also worried about the situation on the Korean peninsula,” said Chen Xu, an analyst for Founder Cifco Futures. “The escalating geopolitical tensions have made investors switch to a risk-off mode and scurry for safer assets.”

New satellite images suggest North Korea might be preparing its sixth nuclear test as the reclusive state marks the 105th anniversary of the birth of founder Kim Il-sung on Saturday, according to media reports. Last week, the US Navy announced it had dispatched a carrier group to waters close to the Korean peninsula in response to North Korea’s increased nuclear threat.

Among market movers, Cathay Pacific Airways, Hong Kong’s flagship carrier, climbed as much as 3.5 per cent after the company said it would replace chief executive Ivan Chu Kwok-leung with chief operating officer Rupert Hogg on May 1. The stock closed the day up 0.2 per cent at HK$10.94.

“What [Cathay] really needs is new blood from another airline or company,” said Andrew Sullivan, managing director for sales trading at Haitong International Securities.

Chow Tai Fook Jewellery Group rallied 5.8 per cent to HK$8.36 after the Hong Kong jewellery brand posted a 12 per cent increase in same-store sales in mainland China. Rival Luk Fook Holdings (International) also soared 8.2 per cent to HK$27.60.

On the Chinese mainland, stocks closed higher on the back of stronger-than-expected trade data.

The Shanghai Composite Index inched up 0.1 per cent to finish at 3,275.96 points. The CSI 300, which tracks large companies listed in Shanghai and Shenzhen, rose 0.2 per cent to 3,514.57 points.

The Shenzhen Composite Index and the start-up board ChiNext index gained 0.4 per cent and 0.7 per cent respectively, closing at 2,014.666 points and 1,910.48 points.

Combined turnover fell 25 per cent to 493.1 billion yuan (US$71.5 billion) from the previous session.

Earlier in the day, government statistics showed China’s March exports increased 16.4 per cent from a year earlier in US dollar terms, reversing a 1.3 per cent decline in February. Imports jumped 20.3 per cent.

“Export growth rebounded strongly after the February distortion from front-loaded activity in January [due to the Lunar New Year holidays],” Nomura analysts said in a note following the data release. “The trade data suggests growth momentum remained resilient in March.”

On the mainland exchanges, all three newly listed stocks surged by their 44 per cent allowable first-day limit.

Hubei Yingtong Telecommunication Cable, which makes cables for phone companies, jumped to 24.84 yuan on its Shenzhen debut from an initial public offering price of 17.25 yuan.

Guangdong Liantai Environmental Protection, a provider of water treatment services, rose to 8.58 yuan in Shanghai from 5.96 yuan.

Fibocom Wireless, which distributes and produces wireless broadband equipment, advanced to 15.05 yuan from 10.45 yuan.

On Wall Street, US stocks closed lower on Wednesday, pressured by rising geopolitical tensions, President Donald Trump’s comments on the dollar and the future of Fed chairwoman Janet Yellen.

Trump said the US was “not getting along with Russia at all” and the relations between the two countries “may be at an all-time low”.

“Investors are seeking safe havens as the German cabinet discusses Brexit, the French election has just less than two weeks to go and Russia demands clarity on US policy towards Syria,” Sullivan said.

In an interview with The Wall Street Journal on Wednesday, Trump said the dollar “is getting too strong” but walked back from an earlier pledge to label China a currency manipulator. “They’re not currency manipulators,” he told the newspaper.

He also touched on the possibility of reappointing Yellen as Fed chairwoman and said he liked “a low-interest-rate policy” during the interview.

The S&P 500 Index was down 0.38 per cent to close at 2,344.93 points while the Dow Jones Industrial Average dipped 0.29 per cent to 20,591.86 points. The Nasdaq Composite Index fell 0.5 per cent to 5,836.16 points.

In Asia, Japan’s Nikkei-225 Index was 0.7 per cent lower at 18,426.84 points yesterday and Australia’s S&P/ASX 200 Index also lost 0.7 per cent to 5,889.9 points.