Hong Kong claws back losses as US-China trade war fears ease
Oil shares buck weak market trend in Shanghai, after China launches first yuan crude oil futures
Hong Kong stocks clawed back earlier lost ground in a technical rebound on Monday, as trade war worries eased amid expectations that China was confident of keeping demands by the US from spiralling out of control.
In recent days China has warned the US it is not afraid of any trade war, threatening its own tariffs on US$3 billion worth of US goods, and signalling it could scale back purchases of US Treasuries in response to US President Donald Trump’s proposed new import tariffs.
Hong Kong’s Hang Seng Index closed 0.79 per cent, or 239.48 points, higher at 30,548.77 after skidding 1,192 points last week in the wake of Trump signing a presidential memorandum to impose tariffs on Chinese imports valued at US$60 billion. That fulfilled his campaign promise to close a yawning trade deficit spawned by what he called unfair trade practices.
The Hang Seng China Enterprises Index, or the H-shares index, rose 0.57 per cent to 12,197.70.
“Stocks reversed on a technical rebound,” said Louis Wong Wai-kit, director of Phillip Capital Management.
“China seems to have sufficient bargaining chips to retaliate and keep US demands from getting out of control, for now. However, how trade negotiations will finally play out remains uncertain.”
Tencent Holdings climbed 1.57 per cent to HK$426.60, after sliding nearly 10 per cent last week.
UBS reduced its forecast for the tech giant’s gross profit margin for 2018, due to weaker profit margins from online gaming. Still, it said Tencent’s investments in its mobile payments business and online video content will support the company’s long term growth.
Smartphone lens maker Sunny Optical Technology (Group) advanced 4.15 per cent to HK$158 after Daiwa lifted its price target to HK$195 from HK$185.
Oil shares gained as China’s first yuan-denominated crude oil futures started trading on Monday, a move widely seen as the country’s efforts at gaining pricing power in the global marketplace, after replacing the US as the world’s largest importer last year.
Sinopec Corp jumped 5.16 per cent to HK$6.93 after posting a 10 per cent increase in net profit for last year. CNOOC, which reports its results on Thursday, advanced 2.09 per cent to HK$11.74m, while PetroChina rose 1.49 per cent to HK$5.45.
Great Wall Motor tumbled 3.66 per cent to HK$8.17, after reporting a 52 per cent plummet in 2017 net profit.
Hong Kong’s market sentiment was also buoyed by gains in the mainland’s Nasdaq style ChiNext, Wong said, which rose 3.16 per cent or 54.59 points to 1,780.61.
The Shanghai Composite Index narrowed losses, finishing 0.60 per cent lower fell to 3,133.72, the CSI 300 slipped 0.64 per cent to 3,879.89, while the Shenzhen Composite Index gained 1.34 per cent or 23.74 points to 1,790.35.