Daily Report

China stocks close at one-month high; traders eye Trump, economic data

Encouraging manufacturing figures drive gains but turnover down as Trump’s first news conference since the election expected to influence the US dollar and equities

PUBLISHED : Monday, 09 January, 2017, 9:11am
UPDATED : Monday, 09 January, 2017, 10:34pm

Mainland Chinese stocks extended gains from last week and closed on Monday at their highest level in a month, while Hong Kong shares rose for a third consecutive session as traders awaited a batch of important mainland economic indicators due later this week and Wednesday’s news conference by United States president-elect Donald Trump, the first since his election.

The Shanghai Composite Index rose 0.5 per cent or 16.92 points to close at 3,171.24, adding to last week’s 1.6 per cent gain. The finish also marked the best closing level since December 9.

The CSI 300 gained 0.5 per cent to 3,363.9. The Shenzhen Component Index and the Shenzhen Composite Index both settled higher, up 0.4 per cent and 0.3 per cent respectively to 10,331.79 and 1,994.15. However, the Nasdaq-style ChiNext Index was off 0.2 per cent at 1,961.62.

In Hong Kong, the Hang Seng Index extended gains into its third consecutive session, rising 0.3 per cent or 55.68 points to 22,558.69. Last week it advanced 2.3 per cent.

However, trading volumes shrank. Combined turnover for Shanghai and Shenzhen markets decreased 9 per cent to 415.4 billion yuan from Friday, and turnover for the Hong Kong market also fell to HK$51.6 billion compared with Friday’s HK$58 billion.

“Stocks have moved higher since start of the year, as China’s manufacturing data pointed to a stronger-than-expected industrial growth and the yuan rebounded sharply against the US dollar,” said Cheng Jiawei, an analyst for Guotai Junan Securities International.

“However, as the inauguration of Donald Trump and the Chinese Lunar New Year holidays approach, we expect investors to realise profit ahead and Hong Kong stock markets to remain range-bound in the near term,” he added.

The focus of this week will be a raft of Chinese economic data, including December figures for consumer and producer prices on Tuesday and trade statistics on Friday, and a closely watched “general news conference” by Trump on Wednesday in New York.

“Trump’s news conference could have an influence on the US dollar, equities, and even global financial markets,” said analysts from China Merchants Bank International in a note on Monday.

Leading the way in Hong Kong were Macau casino operators, as several investment banks, including Bank of America Merrill Lynch and China International Capital Corp, expected Macau’s gambling revenues to improve this year. Galaxy Entertainment surged 4.3 per cent to HK$35.45, Wynn Macau climbed 3 per cent to HK$13.04, and Sands China tacked on 2.7 per cent to HK$34.55.

Energy plays also jumped after oil prices rose last week. PetroChina advanced 2.3 per cent to HK$6.18, and Sinopec added 0.9 per cent to HK$5.87.

State-owned financial conglomerate Citic rose 1.2 per cent to close at HK$11.46, after McDonald’s agreed to sell an 80 per cent stake in its mainland and Hong Kong businesses to a consortium including Citic and Carlyle Group, according to a joint statement by the companies.

In the mainland market, insurance shares added to recent gains, with China Life Insurance up 1.6 per cent to 25.59 yuan, and New China Life Insurance adding 1 per cent to 44.7 yuan.

However, Kweichow Moutai, which is the highest priced stock in the A-share market, pulled back after a record-setting run last week, down 0.6 per cent to finish at 348.79 yuan. On Friday, shares of the Chinese liquor maker hit a fresh intra-day record of 359.78 yuan, before closing 1.2 per cent higher at 350.76 yuan. On Wednesday, it surged more than 5 per cent to a record closing high of 351.91 yuan, boosted by expectations of liquor sales growth in the Lunar New Year holidays.