Hong Kong Stock Exchange

Hong Kong stocks gain on hope that Boao Forum will introduce major reforms as trade tensions ease

Mainland stocks are mixed, with Hainan-linked shares gaining

PUBLISHED : Monday, 09 April, 2018, 9:15am
UPDATED : Monday, 09 April, 2018, 11:06pm

Hong Kong’s stock market rose the most in about a month on Monday after comments by the US President Donald Trump watered down some trade tension worries. Strong gains were seen in Hainan-related shares in the mainland market amid rising hopes that China would announce market access reforms on Tuesday at the Boao Forum.

The Hang Seng Index climbed 1.29 per cent, or 384.64 points, to close at 30,229.58, its biggest daily gain since March 12. The Hang Seng China Enterprises Index increased by 0.88 per cent to 12,073. Turnover of the mainboard was HK$115.22 billion (US$14.68 billion), the first increase in five sessions.

President Xi Jinping is due to deliver a speech at the Boao Forum held on Hainan Island in south China, an annual summit that’s been dubbed the “ Asian Davos”, which could provide clues on Xi’s stance in settling China-US trade disputes, analysts said.

Investors are watching for any remarks regarding measures to open up markets further, with President Xi expected to announce plans for two new free-trade ports on the island, which would grant greater autonomy, economic freedom and market access for foreigners.

On Sunday, President Trump tweeted that China will take down its trade barriers because it is “the right thing to do”. His top economic adviser Larry Kudlow added that he saw jitters in the trade negotiations but did not expect a trade war.

“I don’t think the Chinese government will want to see the markets slide ahead of the Boao Forum, since President Xi will be giving a keynote speech there,” said Louis Tse Ming-kwong, director at VC Brokerage Limited. “The market is very much oversold.”

Additionally, the stabilisation of Hong Kong’s Hibor rates – a gauge of banks’ short-term funding costs – and the recent decline in mainland Chinese bond yields were benefiting their respective stock markets, the Industrial & Commercial Bank of China said in a research note.

Shares in Sunny Optical Technology, China’s biggest smartphone camera manufacturer and one of Asia’s best-performing stocks this year, jumped 5.87 per cent to a five-day high of HK$151.40. Its shares have already surged 52 per cent since the start of 2018.

Internet giant Tencent Holdings increased 1.03 per cent to HK$410.

Geely Auto surged 5.16 per cent to HK$23.45 after Citigroup reported that the new LK02 sedan was expected to be launched this month that would be a new catalyst for the mainland car manufacturer.

Financials also fared well. Ping An Insurance (Group) advanced 1.13 per cent to HK$80.40, China Construction Bank was up 0.76 per cent to HK$7.99 and HSBC Holdings was up 1.57 per cent to HK$74.20, contributing as much as 46 points to the city’s benchmark index. Hong Kong Exchanges and Clearing gained 1.92 per cent to HK$255.40.

The market is very much oversold
Louise Tse, VC Brokerage

China Mobile climbed 2.73 per cent to HK$73.50.

However United Company Rusal, one of the world’s biggest aluminium producers, plunged 50.43 per cent to a two-year low of HK$2.30 after the US government slapped sanctions on the company’s co-owner and Russian magnate Oleg Deripaska and firms linked to him.

Mainland stocks were narrowly mixed, with the Shanghai Composite Index edging up 0.23 per cent to 3,138.29 while the CSI 300, which tracks top-performing stocks in Shanghai and Shenzhen, slid 0.05 per cent to 3,852.93.

The Shenzhen Composite Index inched up 0.01 per cent to 1,831.83 while the Nasdaq-style ChiNext Composite Index rose 0.26 per cent to 1,841.65.

Hainan-based stocks gained as the ahead of the Boao Forum. Hainan Dadonghai Tourism Centre Holdings’ shares soared by its 10 per cent daily limit to 13.73 yuan, Hainan Shennong Gene surged 5.29 per cent to 4.58 yuan and Hainan Expressway was up 3.92 per cent to 7.95 yuan.