Hong Kong stocks take a breather after rally; Macau casinos, Apple suppliers advance

Macau gaming shares Galaxy Entertainment and Sands China up 7pc and 5pc respectively

PUBLISHED : Tuesday, 14 February, 2017, 9:24am
UPDATED : Tuesday, 14 February, 2017, 10:14pm

Hong Kong stocks finished slightly lower on Tuesday, as investors took a breather after a four-day rally lifted the Hang Seng Index to a four-month closing high on the previous day.

But Shanghai shares eked out gains to register a fifth straight day of advances, after China’s consumer and producer inflation both accelerated more than expected in January.

The Hang Seng Index fluctuated between a tight range of 121 points during the day and ended lower by 0.03 per cent or 7.97 points at 23,703.01.

Before Tuesday, the index had risen for four straight sessions, partially powered by Wall Street’s continued push into record territory and encouraging signs from the Chinese economy.

Also fractionally lower on Tuesday was the Hang Seng China Enterprises Index, or the H-share index, down 0.03 per cent or 3.4 points to close at 10,254.44.

Despite the tepidness of the indices, market turnover remained above the HK$80 billion mark for a fifth day at HK$85.5 billion. Capital flows into Hong Kong equities have gained momentum since last Wednesday, when daily turnover jumped 30 per cent from Tuesday’s HK$69 billion.

Leading the way were Macau casinos and Apple suppliers after the US tech giant closed at a fresh all-time high overnight in US trading.

“Money has been flowing into Hong Kong equities and ‘hyping’ up sectors in turns, particularly Chinese financial plays,” said Linus Yip, chief strategist for First Shanghai Securities.

“The market is lively at the moment and investors are actively chasing the rally,” he said.

“The earnings season for blue-chip stocks is about to kick off, which may be key to whether the momentum could sustain in the short run,” Yip said.

Money has been flowing into Hong Kong equities and ‘hyping’ up sectors in turns, particularly Chinese financial plays
Linus Yip, First Shanghai Securities

On the mainland, the Shanghai Composite was up 0.03 per cent or 1.09 points at 3,217.93.

The CSI300, which measures the performance of large companies listed in Shanghai and Shenzhen, was down 0.01 per cent or 0.48 points to 3,435.8.

The Shenzhen Component Index, the Shenzhen Composite Index, and the startup index ChiNext dropped 0.1 per cent, 0.02 per cent, and 0.2 per cent each, ending at 10,264.92, 1,964.32, and 1,909.4 respectively.

A total of 431.3 billion yuan worth of shares changed hands in Shanghai and Shenzhen, down 11 per cent from Monday.

Earlier in the day, government statistics indicated China’s consumer price index (CPI) rose 2.5 per cent in January from a year earlier, accelerating from December’s 2.1 per cent and slightly above market expectations.

The producer price index (PPI) also increased more than expected by 6.9 per cent from a year ago, up from the 5.5 per cent rise in December.

“We expect policy makers to maintain their tightening bias, as activity growth appears to be holding up and inflationary pressures remain,” said Goldman Sachs analysts in a Tuesday note.

“Looking forward, year-over-year CPI inflation will likely moderate in February because of the high base in the same period last year,” they said.

Among individual performers, Galaxy Entertainment soared 6.9 per cent to HK$37.85 and Sands China jumped 4.9 per cent to HK$33.1 in Hong Kong, after several investment banks, including JP Morgan, UBS, and Citibank, forecast Macau’s gaming revenues will continue to increase in February.

Sunny Optical Technology, which supplies dual cameras for Apple iPhones, climbed 3.6 per cent to HK$50.9. Acoustic component manufacturer AAC Technologies, also an Apple parts supplier, rose 1.2 per cent to HK$86.2.

Hong Kong’s main free-to-air terrestrial television broadcaster TVB leapt 9.2 per cent to HK$33.15. The company announced on Monday evening that it had raised the offer price to HK$35.075 per share in its share buyback plan, compared with the previous offer of HK$30.5 on January 24.

Separately, steel makers advanced in the mainland market, with Xinyu Iron & Steel up 5.2 per cent to 4.46 yuan, and Maanshan Iron & Steel gaining 4.5 per cent to 3.49 yuan.

In other Asia-Pacific markets, Tokyo’s Nikkei 225 closed down 1.13 per cent to 19,238.98 and Sydney’s S&P/ASX 200 was off 0.1 per cent at 5,755.20.

Overnight on Wall Street, all three major stock indices ended at fresh record highs following US President Donald Trump’s previous pledge to unveil a major tax plan in the next few weeks.

The Dow Jones Industrial Average rose 142.79 points, or 0.7 per cent, to 20,412.16. The S&P 500 gained 12.15 points, or 0.52 per cent, to 2,328.25. The Nasdaq Composite added 29.83 points, or 0.52 per cent, to 5,763.96.