Hong Kong stocks touch another 2016 high on financial sector gains, CK Hutchison merger approval

PUBLISHED : Friday, 02 September, 2016, 9:28am
UPDATED : Friday, 02 September, 2016, 6:12pm

Hong Kong stocks touch another 2016 high on Friday, as the financial sector extended gains and Hong Kong conglomerate CK Hutchison surged after receiving approval for an Italian telecommunications merger from the European Union.

The Hang Seng Index gained 0.45 per cent or 104.36 points to 23,266.7, the highest level this year, while the Hang Seng China Enterprises Index rose 0.84 per cent to 9,686.88. For the week, the Hang Seng Index gained 1.5 per cent.

CK Hutchison, owned by Hong Kong tycoon Li Ka-shing, was the best performer among blue-chips, jumping 3.26 per cent to HK$102.8 after the European Union gave the green light to a merger between CK Hutchison’s 3 Italia and Russian telecom company VimpelCom’s Wind Group.

China Construction Bank Corporation rose 0.51 per cent to HK$5.93 while and Ping An Insurance (Group) Company of China rose 1.71 per cent to HK$41.6. The insurance and brokerage sectors also gained.

Sino-British banking giant HSBC Holdings was the most heavily-traded stock. The lender fell 0.17 per cent to HK$59, after it at one stage hit HK$59.8, the highest in nearly eight months.

“Recent gains in the benchmark index were mainly driven by the share movements of some index heavyweights,” said Ricky Huang, an analyst for Lukfook Financial. “The current market sentiment is not that strong,” he added.

Gaming stocks retreated from Thursday’s rally, as Galaxy Entertainment fell 0.92 per cent to HK$27.05 and Sands China lost 0.62 per cent to HK$32.25.

Huang said the outlook is still positive for Hong Kong stocks in the medium to long term, as the strong Chinese Purchasing Managers’ Index (PMI) data released on Thursday suggested the economy has stabilised.

Recent gains in the benchmark index were mainly driven by the share movements of some index heavyweights
Ricky Huang, Lukfook Financial

Analysts said Friday night’s US non-farm payrolls data could provide further clues on the strength of the US economy and will be a key factor in the US Federal Reserve’s interest rate decision.

Recent data showed US private payrolls grew at a steady pace in August. However, US factory activity disappointed in August. On Thursday, the Institute for Supply Management said its manufacturing index fell to 49.4 in August from 52.6 in July. The 50 mark separates growth from contraction.

Looking ahead, Postal Savings Bank of China Co, the mainland retail bank with the largest distribution network in the country, will kick off a roadshow on Monday for its Hong Kong initial public offering that is seeking to raise HK$62 billion to HK$78 billion, Reuters reported. It would be the world’s largest IPO since Alibaba raised US$25 billion in its New York listing two years ago.

AAC Technologies, a micro-component provider for iPhone, will become one of the 50 constituent stocks of the Hang Seng Index effective on Monday, replacing instant noodle and beverage maker Tingyi. ACC shares dipped 0.52 per cent to HK$86.55 on Friday, while Tingyi shares rose 2.28 per cent to HK$7.64.

Zhuzhou CRRC Times Electric will replace China National Building Material as one of the 40 H-share Index constituents.

On the mainland, the Shanghai Composite Index rose 0.13 per cent to 3,067.35 while the CSI 300, which tracks the large caps listed in Shanghai and Shenzhen, was up 0.38 per cent to 3,314.11.

Home appliance makers saw their shares rise, with Gree Electric Appliances surging 9.99 per cent to its daily limit, ending at 19.49 yuan.

The Shenzhen Composite Index dipped 0.4 per cent to 2,009.29 and the Shenzhen Component Index fell 0.27 per cent to 10,640.42. The Nasdaq-style ChiNext was off 0.48 per cent to 2,170.86.