Daily Report

Hong Kong stocks rip higher ahead of holiday weekend; Hang Seng Index closes out first-half with 5.1pc loss

Hong Kong stocks enjoyed sharp gains ahead of the holiday weekend, led by gains in the utilities sector, as investors continued to favour safety over growth

PUBLISHED : Thursday, 30 June, 2016, 9:02am
UPDATED : Thursday, 30 June, 2016, 10:51pm

Hong Kong stocks closed higher on Thursday, recording their biggest daily gain in June as they extended a recovery from the sell-off after the British vote to leave the European Union.

The Hang Seng Index rallied 358.25 points or 1.75 per cent to 20,794.37 on the last trading day of the first half, while the Hang Seng China Enterprises Index jumped 1.65 per cent or 141.45 points to 8,712.89.

The Hang Seng’s cumulative 3 per cent rally on Wednesday and Thursday helped narrow the first-half loss to 5.1 per cent, or 1,120 points.

The Hong Kong stock market will be closed for a public holiday on Friday and reopen for trade on Monday.

During Thursday’s trading session, all sectors increased, with coal and utilities leading the advance, rising 2.61 per cent and 1.55 per cent respectively.

The turnover on the main board jumped 14 per cent, reaching HK$72.52 billion, the highest level this week.

Kenny Tang Sing-hing, Jun Yang Securities chief executive, said the fear over Brexit had eased for the moment.

Stocks under the control of Li Ka-shing’s family, which have businesses exposed to the UK and EU, all rebounded. CK Hutchison Holdings rose 2.05 per cent to HK$84.55.

HSBC and Standard Chartered, among the most closely tied to Europe, added 0.9 per cent and 0.7 per cent respectively.

Hong Kong Exchanges and Clearing shares edged up 0.64 per cent to HK$187.60.

Tang said investors are also betting that mainland authorities will announce in July a launch date for the Shenzhen Hong Kong Stock Connect.

“There are also expectations on capital inflow from the European market to emerging markets to [help] avoid the turmoil of Brexit,” Tang added.

However, Castor Pang Wai-sun, Core Pacific Yamaichi’s head of research said he does not see a rising momentum for Hong Kong stocks in the second half as global economies will be weak due to uncertainties.

“China’s economy is recovering but at a slow pace and the Chinese yuan is expected to remain weak,” Pang said.

Mainland stocks fell slightly on Thursday. The Shanghai Composite Index dropped 0.07 per cent or 1.99 points to 2,929.61 while the CSI 300 added 0.08 per cent to 3,153.92.

The Shenzhen Composite Index added 0.05 per cent to 1,974.24 while the Nasdaq-style ChiNext rose 0.81 per cent or 18 points to 2,227.79.

Sinolink Securities analyst Li Lifeng said the A-share market is unlikely to attract more capital in the second half, expecting the Shanghai index to hover around 2,700 to 3,100.

The fallout from Brexit, the pace of interest rate hikes in the US, yuan volatility and prospects for an “L-shaped” economic growth all increase uncertainty in China’s stock market, Li wrote in a report.