Hong Kong stocks close at 3-month high after Trump’s tax cut hint

Shanghai Composite closes at two month high after China’s January trade data beat market expectations

PUBLISHED : Friday, 10 February, 2017, 9:23am
UPDATED : Friday, 10 February, 2017, 10:09pm

China’s shares closed at their highest level in two months, while Hong Kong stocks reached their highest closing level in more than three months on Friday.

The gains followed advances on Wall Street after a tax pledge from US President Donald Trump, as well as better-than-expected Chinese trade data for January.

The Hang Seng Index extended a three-day winning streak and closed up 0.21 per cent at 23,574.98, the best finish since late October.

The Hang Seng China Enterprises index, or the H-share index, also rose 0.50 per cent to close at 10,125.21.

Daily turnover reached HK$86 billion, slightly lower than Thursday’s HK$96 billion. But that was still significantly higher than the $57.2 billion average daily turnover in January. In 2016, the daily average turnover was HK$67 billion.

Among market movers in Hong Kong, index heavyweight HSBC touched an intraday high of HK$67.45, the highest level in more than three years. It closed at HK$67.05, up 1.28 per cent. The company is due to reveal its 2016 financial results on February 21.

Smaller rival Hang Seng Bank also rose before its scheduled release of annual results on the same day, with its shares closing up 1.07 per cent at HK$161.20.

TVB saw its shares drop 0.82 per cent to close at HK$30.35 on Friday, after the Hong Kong broadcaster had a volatile day of trading Thursday, with its stock price at one point jumping 6 per cent during morning session. The company said Wednesday night that it had received “a conditional cash partial offer” from TLG Movie & Entertainment Group to buy a 29.9 per cent stake. But TVB also said there’s “no certainty the plan will materialise into a credible offer”.

Meanwhile, the two IPO stocks in the Hong Kong market traded mixed.

Lai Si Enterprise Holding, a Macau construction and engineering contractor, surged as much as 51 per cent to close at HK$1.74 on its debut on the Hong Kong bourse from its offer price of HK$1.15.

However, Sanroc International Holdings, which provides trading of construction machinery and drilling accessories in Hong Kong, sank 22.5 per cent to close at 31 Hong Kong cents from its offer price of 40 Hong Kong cents.

In the mainland, the Shanghai Composite Index reached its highest level in two moths on Friday, up 0.42 per cent to close at 3,196.70, while the blue-chip CSI300 index added 0.5 percent, to 3,413.49.

Jiangshan Oupai Door Industry, which debuted on the Shanghai Stock Exchange on Friday, jumped 44 per cent immediately after the market opened and was suspended from trading. Its share price closed at 35.76 yuan, compared with an initial public offering price of 24.83 yuan.

The Zhejiang-based wooden door maker raised 502 million yuan through its IPO, reporting an oversubscription rate of 3,515 times in its online tranche.

Stocks have an upper limit of 44 per cent on the first day of trading in the Shanghai and Shenzhen stock markets.

Investor sentiment across the board got a lift after official data showed China’s exports increased 7.9 per cent year-on-year in US dollar terms, while imports also jumped 16.7 per cent, both exceeding market expectations.

“The big picture is that Chinese trade values have been picking up in recent months thanks to a revival in global manufacturing, the continued strength of China’s domestic economy and the rebound in global commodity prices,” said Julian Evans-Pritchard, a China economist for Capital Economics.

“We expect this improvement to be sustained in the short-run, even as seasonal factors mean that headline trade growth is likely to fall back sharply in February,” he added.

The stock rise was also fuelled by record highs on Wall Street overnight, after US President Trump promised there will be a “phenomenal” tax announcement in two or three weeks, albeit offering no details. Trump’s press secretary Sean Spicer later said the tax plan is “comprehensive” and will “spur economic growth”.

All three US stock indexes hit new all-time highs at Thursday’s close. The Dow Jones Industrial Average rose 118.06 points, or 0.59 percent, to end at 20,172.40. The S&P 500 gained 13.2 points, or 0.58 percent, to end at 2,307.87. The Nasdaq Composite added 32.73 points, or 0.58 percent, to close at 5,715.18.

In other Asia-Pacific markets, Tokyo’s Nikkei 225 closed at the highest level in two weeks,

up 2.5 per cent to finish at 19,378 on Friday following Wall Street gains. Sydney’s S&P/ASX 200 rose 0.99 per cent to 5,720.60, while Seoul’s Kospi added 0.45 per cent to close at 2,075.