Hong Kong Stock Exchange

Hong Kong stocks end the week lower after monetary authority steps in to prop up currency yet again

Benchmark Hang Seng Index was at 30,808.38, down 0.07 per cent at the close on Friday

PUBLISHED : Friday, 13 April, 2018, 9:21am
UPDATED : Friday, 13 April, 2018, 7:35pm

The Hong Kong stock market ended the week lower, seesawing through the day on Friday, after the city’s de facto central bank took the rare action of stepping in to prop up the Hong Kong dollar on Thursday and Friday. Mainland markets also slipped.

The benchmark Hang Seng Index edged down 0.07 per cent, or 22.9 points, to 30,808.38 at the close on Friday, while the Hang Seng China Enterprises Index, known as the H-share gauge, dropped 0.22 per cent to 12,261.23.

The turnover on Friday was HK$97 billion (US$12.36 billion) – about 20 per cent lower than the weekly average.

The dip comes after the Hong Kong Monetary Authority intervened for the first time since the trading band was imposed 13 years ago. The HKMA bought another HK$2.44 billion and sold US$311 million on Friday morning, after a purchase of HK$816 million on Thursday.

Its intervention on Friday was triggered by the Hong Kong dollar sinking back to 7.85 to the US dollar – the lower end of permitted range – early in the morning.

The HKMA has bought HK$3.26 billion worth of the currency in total.

“I don’t think it will have much effect on the market as interbank liquidity remains quite strong,” said Kenny Tang Sing-hing, the chief executive of Jun Yang Securities. “The Hibor [Hong Kong Interbank Offer Rate] also remains relatively low. ”

Among the top gainers in Hong Kong on Friday, Macau casinos surged on the news that gambling magnate Stanley Ho is to retire as chairman of SJM Holdings. SJM rose 3.6 per cent to HK$7.2 at the close, after climbing as high as HK$7.56 earlier in the morning. Wynn Macau increased by 3.8 per cent and Sands China added 1.26 per cent.

“Although Stanley hasn’t been handling the business for many years, his retirement means Daisy [his eldest daughter] and Angela [his wife] will have greater power on the board and simplify its structure,” said Brett McGonegal, the chairman and chief executive of Capital Link Investment Holdings.

“The [Macau casino] sector has been doing well in the past few months, and I think it’s fairly valued now.”

Banks generally rose. HSBC Holdings climbed 1.26 per cent to HK76.35. Bank of China (Hong Kong) increased by 2.02 per cent to HK$37.85, while Bank of East Asia added 0.62 per cent to HK$32.5.

“The Chinese banks are underpriced compared with their peers in countries such as the US and UK. They will benefit from China’s opening up of the finance sector,” said McGonegal.

Elsewhere in the financial sector, AIA lost 0.14 per cent, China Life dropped 0.5 per cent, while Prudential moved up 0.7 per cent.

Among the top losers, Taiwanese footwear maker Yue Yuen International plunged by 13.73 per cent to HK$24.5 after a failed attempt to privatise the sports retailer, Pou Sheng International, which fell 5.76 per cent on Friday. The pair own shares in each other, but the plan was initiated by Pou Sheng and was rejected by Pou Sheng’s shareholders in a meeting.

Yue Yuen plans to sell Pou Sheng stock and issue a special dividend to its shareholders if the privatisation succeeds. Shares in Yue Yuen lost more than 10 per cent when the news broke on Tuesday.

Shares in Chinese drug producers in Hong Kong generally dropped after China said late on Thursday that it will remove tariffs on imported cancer drugs from May 1. The report from the State Council chaired by Premier Li Keqiang also said China will strengthen intellectual property protection for drugs.

HEC Pharm plunged by 9.53 per cent to HK$38.9, Fosun Pharma lost 6.08 per cent and Sinopharm Group dropped 3.38 per cent.

In mainland trading, the Shanghai Composite lost 0.67 per cent to 3,159.05 at the close on Friday. The CSI 300, which tracks big caps in Shanghai and Shenzhen, dropped 0.71 per cent. The Shenzhen composite moved down 0.32 per cent while the Nasdaq-style ChiNext edged down 0.13 per cent.

The dips in Hong Kong and mainland China stocks bucked the global market surge on Thursday, as trade tensions eased and the US said it was looking to rejoin the Trans-Pacific Partnership.

The Dow Jones was up by 1.21 per cent, lifted by the positive prospect of coming earnings reports from Citigroup, Wells Fargo and JPMorgan. The S&P 500 moved up 0.83 per cent, while the Nasdaq added 1.01 per cent.

US President Donald Trump might do a U-turn on the TPP, a year after pulling his country out of the trade agreement, in a move that looked like an effort to please American farmers, as partnerships would open up more overseas markets for US agricultural goods.