Hang Seng Index

Hong Kong stocks post best weekly performance in three months as developers rally

A rally in Country Garden and mainland developers sends the Hang Seng Index to its biggest weekly gain since October, while the Shanghai Composite Index falls on sell-off in liquor and insurance stocks

PUBLISHED : Friday, 22 December, 2017, 9:20am
UPDATED : Friday, 22 December, 2017, 10:16pm

Hong Kong stocks rose, with the Hang Seng Index capping its biggest weekly gain in almost three months, as Country Garden Holdings led the advance along with other mainland property developers.

The city’s benchmark equity gauge added 0.7 per cent, or 210.95 points, to 29,578.01 at Friday’s close, extending the gain to 2.5 per cent this week. The Hang Seng China Enterprises Index, known as the H-share gauge, edged up 0.5 per cent. The mainland’s Shanghai Composite Index fell slightly on declines in liquor distillers and insurers, the year’s best-performing sectors.

Trading was light before the Christmas holidays, with volumes at 46 per cent below the 30-day average on Friday. Hong Kong’s market will be closed on Monday and Tuesday for the public holidays. The Hang Seng Index has rallied 34 per cent this year, poised to become the best performer among major stock markets globally.

Country Garden and mainland-based property developer resumed their run-up on expectations of strong earnings growth this year. Government-directed de-stocking of housing inventories mainly in China’s third- and fourth-tier cities has propped up sales of the Hong Kong-listed developers, according to Dai Ming, a fund manager at Hengsheng Asset Management in Shanghai. The shares of Country Garden has more than tripled this year as semi-annual sales increased at least 20 per cent for each of the six-month period over the past five years.

“It’s a valuation recovery for Hong Kong-listed mainland developers,” said Dai. “They have recovered from the much beaten-down valuations and the pickup in earnings has stoked the rally in the sector this year.”

Country Garden rose 2.6 per cent to HK$13.40. Sunac China Holdings climbed 3.2 per cent to HK$30.25 and China Vanke surged 4.5 per cent to HK$29.95.

China Resources Land gained 1.8 per cent to HK$22.15 and China Overseas Land & Investment finished 1 per cent higher at HK$24.40.

It’s a valuation recovery for Hong Kong-listed mainland developers
Dai Ming, Hengsheng Asset Management

Tsingtao Brewery surged 5.9 per cent to HK$39.65, partially recouping a 6.4 per cent loss for the previous day after Fosun Group bought an 18 per cent stake in the brewer.

In the mainland, the Shanghai Composite Index slipped 0.1 per cent, or 3 points, to 3,297.06. The measure added 1 per cent this week, the first weekly gain for the five-day period. The CSI 300 Index of big-cap stocks lost 0.3 per cent on Friday.

Wuliangye Yibin, China’s second-largest distiller of the fiery liquor baijiu, dropped 1.9 per cent from a record to 80.58 yuan, trimming its gain to 134 per cent this year. Luzhou Laojiao slumped 3.1 per cent to 66.12 yuan, paring the annual advance to 100 per cent.

Ping An Insurance Group slid 1.2 per cent to 74.02 yuan and New China Life Insurance retreated 1.5 per cent to 67.51 yuan. The two stocks have rallied at least 54 per cent in 2017, as premium incomes grew and rising bond yields boosted returns from new investments.

Gas suppliers surged on Friday as rising demand in the height of winter has driven up prices in liquefied natural gas. Chongqing Gas Group and Anhui Province Natural Gas Development both jumped by the 10 per cent daily limit.