Hong Kong stocks end higher, HKEX jumps 4.2pc after laying course for listing rule change

The Hang Seng Index closed higher for the first time in three days, bolstered by Hong Kong Exchanges and Clearing

PUBLISHED : Monday, 18 December, 2017, 9:11am
UPDATED : Tuesday, 19 December, 2017, 2:31am

Hong Kong’s stocks gained for the first time in three trading days, as the city’s stock exchange operator jumped the most in four weeks on optimism that its revision of listing rules will attract more blockbuster IPOs to the city.

The Hang Seng Index climbed 0.7 per cent, or 202.30 points, to 29,050.41 at the close. The Hang Seng China Enterprises Index, or the H-share gauge, advanced 0.4 per cent. Mainland equity benchmarks rose slightly as a rally in Chinese liquor distillers countered the move by the central bank to raise borrowing costs in its open market operation.

Hong Kong Exchanges and Clearing rallied 4.2 per cent, making the stock the second-biggest contributor to the benchmark index’s gain on Monday. The exchange operator said after the market close on Friday that it will allow listings of dual-class shares and launch a formal public consultation in the first three months of 2018. The exchange operator has been smarting over the snub by Alibaba Group Holdings, the world’s largest online shopping platform, which bypassed Hong Kong for 2014 IPO in favour of New York, which allows companies with more than one type of share to list.

The Hang Seng Index now remains down 3.2 per cent from its decade high of 30,003.49 seen last month, as some traders cashed out of stocks with outsize gains. Still, the benchmark has advanced 32 per cent this year to rank as the best performer of the world’s major equity markets.

“I think the index will close at about 29,000 this year,” said Francis Lun, chief executive officer of GEO Securities. “The US markets were at a record high last Friday because of the tax reform, so basically Tencent and the financials rose to recover the market.”

HKEx climbed HK$9.60 to HK$236. Trading volumes on the stock were 1.4 times the 180-day average, according to Bloomberg data. Internet giant Tencent Holdings rose 1.3 per cent to HK$394.20.

On the mainland, the Shanghai Composite Index gained 0.1 per cent, or 1.78 points, to 3,267.92. The CSI 300 Index of large companies also added 0.1 per cent.

A gauge of consumer-staples stocks on the CSI 300 jumped 2 per cent on Monday as the best-performing sector. Wuliangye Yibin, China’s second-largest distiller of fiery liquor, surged 5.7 per cent to 77.08 yuan as Citic Securities said in a research note that the company aims to boost revenues by more than 30 per cent in 2018.

The nation’s biggest listed brokerage raised its projection for Wuliangye’s 2018 profit by 7.7 per cent and that for 2019 by 18 per cent.

Yonghui Superstore jumped 5.6 per cent to 10.33 yuan as the stock resumed trading after being suspended for the whole of last week. Tencent agreed to buy a 5 per cent stake in the supermarket operator for 4.22 billion yuan (US$639 million), according to an exchange statement last week.

Gains on the broader market were limited as the People’s Bank of China raised the cost of 14-day reverse purchase agreements by five basis points on Monday, following similar increases to 7- and 28-day contracts last week. Last Friday’s move, which came right after the Federal Reserve increase the US benchmark interest rate, is a reflection of rising demand for cash by the year end, according to the central bank.

“It is very mixed because last week the central bank raised the return lending facility, MLF interest rates, so it shows that the banks will continue money supply and control credit,” Lun of GEO Securities said.

China kicks off its annual Central Economic Work Conference today, during which the Communist Party will map out the economic agenda for the next year.