Hang Seng ends higher for the week, bolstered by Bank of England easing, gains in HSBC

Hang Seng closes out the week with a 1.16 per cent gain. HSBC touches a six-month high amid start to share buybacks in London

PUBLISHED : Friday, 05 August, 2016, 9:22am
UPDATED : Friday, 05 August, 2016, 10:19pm

The long awaited monetary easing from the Bank of England became a great morale booster for Hong Kong stocks on Friday, pushing up local benchmarks to approach a two-week high.

The Hang Seng Index ended at 22,146.09, up 1.44 per cent or 313.86 points, reflecting the biggest intraday gain since July 12. Banking and local property sectors led the rally. Hang Seng China Enterprises Index also jumped 1.41 per cent to 9,131.52, boosted by the financial sector.

The upbeat mood in Hong Kong was mostly fuelled by the Bank of England’s rate cut and asset purchase plan, said Vincent Ji, a strategist at China Merchants Securities (HK).

“The Hang Seng Index is expected to hit 23,000 before the third quarter, before risks are expected to rise in the fourth quarter due to the expectation of an interest rate hike by the Federal Reserve,” said Ji.

Although the Bank of England’s move boosted hope, investors seem to also be eyeing United States non-farm employment figures for July, which are due to be released at 8.30pm local Hong Kong time on Friday, said Louis Wong Wai-kit, Phillip Securities asset management director.

Market watchers expect to see 180,000 new jobs in July, compared with 287,000 a month earlier, according to a poll by Bloomberg.

“Investors believe the US will not raise the interest rate further until the year-end. Therefore any surprise in the job numbers, or hawkish statements from the Federal Reserve may trigger a correction in the Hong Kong market,” Wong said, adding that the Hang Seng benchmark is near its highest level for the year.

Among the major gainers, Link Real Estate Investment Trust outperformed its blue-chip peers with shares rising 3.93 per cent to HK$56.8. HSBC Holdings shares touched six-month highs at HK$53.85 and ended 0.94 per cent higher at HK$53.50, following the announcement that it had started its share buyback programme in London.

China Vanke, the country’s biggest homebuilder, saw its H-shares at one stage rise 6.1 per cent and end at HK$18.90, up 1.6 per cent. China Evergrande Group shares closed 5.05 per cent higher at HK$5.41. The moves came after Evergrande said Thursday night that it bought 4.68 per cent of Vanke’s A-shares, becoming its fourth largest shareholder.

Vanke’s A-shares in Shenzhen surged 6.51 per cent to 20.95 yuan, adding to a 10 per cent rally the previous trading day.

Following a video leak showing the new iPhone7, companies with business links to Apple gained in Hong Kong. Sunny Optical Technology (Group) shares touched an intraday historic high at HK$33.35 and ended at HK$32.8, up 7.19 per cent. FIH Mobile shares closed 1.52 per cent higher to HK$2.68.

In other Hong Kong action, Dining Concepts, a new listing in the Growth Enterprise Market board, saw shares soaring up 851.11 per cent to close its debut at HK$4.28. The company was invested by Wang Sicong, son of Dalian Wanda Group chairman Wang Jianlin.

In the mainland, stock markets closed almost flat with slim turnover, despite a rally in the property sector due to Vanke’s latest drama in the ongoing shareholder battle. The Shanghai Composite Index ended 0.19 per cent or 5.73 points lower at 2,976.7, ending its three-day winning streak. The CSI 300 Index gained 0.12 per cent or 3.82 points to 3,205.11.

Shenzhen Composite Index shed 0.37 per cent to 1,941.61 while the Nasdaq-style ChiNext lost 0.97 per cent to 2,109.05.

Weekly speaking, Shanghai stocks did not change much, down 2.6 points or 0.08 per cent in the first week of August, while the Hang Seng Index gained 1.16 per cent or 254 points.