Hong Kong stocks end morning higher but key index remains below 19,000 amid currency fears

Hong Kong and mainland China stocks finished the morning session higher on Thursday, although Hong Kong’s benchmark Hang Seng Index remained below the 19,000 level as concerns over the local currency continue to plague the market.

The Hang Seng Index closed the morning at 18,945.60, up 0.31 per cent or 59.30 points, while the Hang Seng China Enterprises Index gained 0.21 per cent or 16.94 points to finish at 8,032.38 at the midday break.

Louis Tse Ming-kwong, director of VC Brokerage, said the morning’s gains represented a technical rebound. Despite heavy fluctuations in two major US indices overnight, US stocks had been able to recover quite a bit, which might have helped contribute to the gains, Tse said.

“At the moment it’s still more of a yo-yo situation,” Tse said, adding that the Hong Kong market was very much oversold. “The peg of the US dollar and Hong Kong dollar is still under attack. [The exchange rate] is better than yesterday, but still the battle is not over yet.”

The offshore yuan continued falling on Thursday morning, trading at 6.6033 at 10 am. The currency has fallen for three days in a row. The onshore yuan traded unchanged at 6.5778.

“Selling pressure against Hong Kong dollar intensifies,” Bank of America Merrill Lynch said in a research report. “We revise our USD/HKD forecast to 7.85 for 2016 as a whole and revise our 3M (three-month) Hibor (Hong Kong interbank offered rate) forecast up.”

Semiconductors, up 0.89 per cent, insurance, up 0.41 per cent, mining, up 0.16 per cent, and banks, up 0.08 per cent, were some of the industries that led the gains on Thursday morning.