Hong Kong Stock Exchange

Hong Kong, Shanghai stocks join upbeat mood, as investors welcome US, China trade talks

The Hang Seng Index had risen 0.9pc by midday, tracking gains in US stocks and bolstered by an upbeat earnings outlook for tech and property companies

PUBLISHED : Tuesday, 27 March, 2018, 9:19am
UPDATED : Tuesday, 27 March, 2018, 10:27pm

Hong Kong and mainland Chinese stocks closed higher on Tuesday as investors were encouraged by ongoing talks between the US and China to avert a full-blown trade war. China Overseas Land and other Chinese property developers led the gains.

Hong Kong’s Hang Seng Index advanced 0.79 per cent, or 242.06 points, to 30,790.83. Turnover was at HK$135.28 billion  The Hang Seng China Enterprises Index, known as the H-share index, gained 0.85 per cent, or 103.85 points, to 12,301.55.

China Overseas Land & Investment jumped 4.4 per cent to HK$28.30 after posting a 10.1 per cent increase in net profit last year. Broker Credit Suisse raised its target price for the stock to HK$36.30 from HK$35.70 on confidence in a recovery in its operations given its strong balance sheet and improving execution.

China Vanke climbed 4.8 per cent to HK$33.95 and Country Garden Holdings increased 3.6 per cent to HK$16.68, after the company said its full-year profit increased 33.4 per cent in 2017 from a year earlier.  

China telcos also gained. China Mobile jumped 3.1 per cent to HK$72.75, and was the biggest contributor to the city’s main benchmark, adding 43 points. China Unicom (Hong Kong) also surged 5.6 per cent to HK$9.84 after several investment banks raised their target prices on the back of the company’s stronger-than-expected earnings for 2017.

AAC Technologies rebounded by 4.7 per cent to HK$151.70 after suffering steep losses in the past few sessions on trade war concerns. The Apple iPhone supplier reported a 32-per cent net profit rise from the previous year to 5.325 billion yuan (US$847 million), in line with estimates.

“Concerns for a trade war have eased as investors expect the US and China to negotiate on tariffs and trade imbalance,” said Sam Chi-yung, a strategist for South China Securities. 

On Monday, a report by The  Wall Street Journal said China and the US had quietly started talks on improving US access to Chinese markets, led by China’s vice-premier Liu He and US Treasury Secretary Steven Mnuchin. 

Concerns for a trade war have eased as investors expect the US and China to negotiate on tariffs and trade imbalance
Sam Chi-yung, South China Securities

So far, China’s response to US provocations appear to remain benign, raising the prospect that China could be willing to negotiate and unveil further market reforms.

“[It’s a] clear sign that China does not intend to escalate the situation into a full-scale trade war. Negotiation and concession between the two countries would be our base case scenario,” Greg Kuhnert, portfolio manager at Investec Asset Management said.

In mainland China, the benchmark Shanghai Composite Index rose 1.05 per cent to 3,166.65. The large-cap CSI 300 Index added 0.86 per cent to 3,913.27.

Other regional markets were also higher. Japan’s Nikkei Average advanced 2.65 per cent to 21,317.32, and Taiwan’s Taiex gained 1.35 per cent to 10,986.79.