Hang Seng Index

Hong Kong stocks reach near 10-year high led by financials, autos despite sell-off in Macau casinos

Hang Seng Index closes at 28,458.04, its highest level since December 2007

PUBLISHED : Friday, 06 October, 2017, 9:16am
UPDATED : Friday, 06 October, 2017, 11:14pm

Hong Kong stocks reached their highest level in almost 10 years at the close on Friday, as sentiment was buoyed by strong gains on Wall Street overnight and advances in the local financial and auto sectors.

The Hang Seng Index closed up 0.3 per cent, or 78.9 points, to 28,458.04 – its highest level since December 12, 2007 – after rising for two straight sessions this week. Market turnover on Friday was HK$103.56 billion.

The Hong Kong market was closed on Monday and Thursday for public holidays.

“Market sentiment is quite optimistic,” said Castor Pang Wai-sun, Core Pacific-Yamaichi’s head of research. “People are primarily looking at positive factors, with all three major US indices hitting fresh highs [overnight] and better prospects on US tax reform,” he said.

In the US, Republicans moved closer to a tax overhaul on Thursday by adopting a spending blueprint that allows them to bypass Democrats to pass a tax bill.

Strong economic data also fuelled optimism, lifting US stocks to records and pushing up Treasury yields. Consequently, Hong Kong insurance stocks were lifted by the month-long rise in the yield on 10-year Treasuries, as they are insurers’ major assets, said Pang.

People are primarily looking at positive factors, with all three major US indices hitting fresh highs yesterday and a better prospect on tax reform
Castor Pang Wai-sun, Core Pacific-Yamaichi’s head of research

Amid the bullish sentiment on the Hong Kong bourse, some analysts believe there might be a correction and some profit-taking when mainland Chinese stock exchanges resume trading on Monday after being closed for the whole week due to the eight-day national day holiday.

“Investors better have an eye on next Tuesday, which is the day for remembering the founding of the [North Korean] ruling Workers’ Party,” said Jasper Lo, senior vice president at iBest Finance. “Kim Jong-un could give another speech that threatens the world’s safety and disturbs the market.”

Still, Lo expects the mainland and Hong Kong markets to open higher on Monday but close lower after a correction.

Ping An, the world’s largest insurance company, rose 1.1 per cent on Friday, while AIA added 1.6 per cent.

ZhongAn Online, China’s first online-only insurer, soared 16.5 per cent. It debuted trading last Thursday, becoming Hong Kong’s first major fintech listing.

Carmakers also rose broadly. Geely Auto, the biggest non-state-owned carmaker on the mainland, gained 5.6 per cent, while electric car maker BYD was up 2 per cent, after having gained 70.5 per cent in the past month.

Macau casinos bucked the upward trend, as fewer mainland Chinese tourists than expected visited Macau during the eight-day Golden Week holiday.

Sands China declined 2.7 per cent and Galaxy Entertainment was down 1.9 per cent.

The Hang Seng Index closed at 28,379.18 points on Wednesday, the highest close in almost two and half years, extending a three-day winning streak. There was no trading on Thursday due to the Mid-Autumn Festival.

Overnight in the US the S&P 500 jumped 0.6 per cent to an all-time high of 2,552.07 points, rising for an eighth day and hitting record highs for the sixth straight day.

The Dow Jones Industrial Average gained 0.5 per cent and the Nasdaq Composite added 0.8 per cent.

Elsewhere in Asia, Japan’s benchmark Nikkei 225 rose 0.3 per cent, while the Sydney All Ordinaries increased 1 per cent. South Korea’s market was closed for a public holiday.