Hong Kong stocks climb as gain in Tencent outweighs net selling by mainland traders in exchange link

The Hang Seng Index rises 0.7 per cent for a second day as the gain in Tencent counters the first single-day net selling in southbound investment since August

PUBLISHED : Tuesday, 19 December, 2017, 9:13am
UPDATED : Tuesday, 19 December, 2017, 5:47pm

Hong Kong stocks climbed for a second day on Tuesday, as the gain in Tencent Holdings countered the first single-day net selling in four months by mainland investors through the stock connect schemes between the city and mainland China.

The Hang Seng Index added 0.7 per cent, or 203.25 points, to 29,253.66 at the close, extending a rebound of the same magnitude a day earlier. The Hang Seng China Enterprises Index, known as the H-share gauge, advanced 1.1 per cent to 11,541.88. The mainland’s Shanghai Composite Index rebounded for a second day.

Strength from overnight trading in US equities also bolstered the sentiment on Hong Kong stocks. All three major US indices finished at all-time highs on Monday on growing expectations that the Republicans will succeed in passing the highly anticipated tax-cut bill in Congress this week. The Hang Seng Index is now just 2.6 per cent shy of its decade high of 30,003.49 reached last month.

“The momentum on Hong Kong stocks is gathering pace again,” said Wei Wei, a trader at Huaxi Securities in Shanghai. “It’s still a bull market and the uptrend is well on track.”

Tencent climbed 1.8 per cent to HK$401.20, contributing almost a quarter of the gain on the Hang Seng Index. The Chinese technology juggernaut announced on Monday that it would lead an US$863 million investment in Vipshop Holdings in a move seen as further rivalling Alibaba Group Holding in e-commerce.

Tencent would put in US$604 million for a 7 per cent stake, while e-commerce firm was investing US$259 million for a 5.5 per cent stake.

The partnership forged by Tencent and can create a synergy effect and diversify Tencent’s products, while in the longer term, also help it to gather more data about consumer behaviour for its development of “smart retail,” according to a Citigroup report. It will be a win situation for all the three parties involved, the note said.

However, mainland investors sold a net of 213.2 million yuan (US$32.3 million) worth in Hong Kong stocks via the stock connect links on Tuesday, the first single-day net selling since August 16, according to Bloomberg data.

It’s still a bull market and the uptrend is well on track
Wei Wei, Huaxi Securities

Smartphone component manufacturer AAC Technologies Holdings jumped 2.6 per cent to HK$140.60, and Sunny Optical Technology Group surged nearly 2 per cent to HK$101.80.

Chinese financials also advanced, with Ping An Insurance Group rising 4.2 per cent to HK$80.55 and PICC Property & Casualty adding 2 per cent to HK$15.16.

On the mainland, the Shanghai Composite Index rose 0.9 per cent, or 28.62 points, to 3,296.54 at the close, extending a 0.1 per cent gain from the previous day. The large-cap CSI 300 Index surged 1.3 per cent.

The Shanghai Composite has recouped less than a fifth of its loss from this year’s high set last month. Insurance companies led the rebound on Tuesday, as China Pacific Insurance advanced 4.2 per cent to 43.19 yuan and Ping An Insurance gained 4.1 per cent to 73.58 yuan.

Factors that have supported growth in the insurance industry in 2017, including growing premium incomes and rising bond yields, are likely to persist into next year, according to Zhou Jingjing, an analyst at Changjiang Securities.