Hong Kong stocks ease back for a fourth straight session ahead of Donald Trump’s first address to Congress

PUBLISHED : Tuesday, 28 February, 2017, 9:09am
UPDATED : Tuesday, 28 February, 2017, 10:50pm

Hong Kong stocks retreated on Tuesday, the last trading day of February, as investors turned cautious ahead of US President Donald Trump’s address to Congress later in the US day.

The city’s benchmark index extended its decline for a fourth trading day in a row, reversing from its highest close of the year at 24,202 last Wednesday.

The Hang Seng Index dropped 0.8 per cent or 184.3 points to 23740.73, while the Hang Seng China Enterprises Index eased 0.3 per cent to 10,297.96.

The turnover continued to shrink, easing to HK$73.1 billion, reflecting the fifth consecutive trading day of declines, or about 34 per cent below this year’s high of HK$ 110 billion on February 15.

Macau casinos shrugged off the weak sentiment, driven by improved earnings. Galaxy Entertainment added 0.3 per cent to HK$37.2 after it posted a 51 per cent rise in 2016 net profit. Sands China was the biggest gainer among the Hang Seng components, rising 1.1 per cent to HK$32.4. SJM Holdings added 0.2 per cent to close at HK$6.4.

CLP Holdings, the larger of Hong Kong’s two electricity suppliers, gained 1 per cent to HK$79 after it reported stable growth in operating profit on Monday.

China Yuhua Education, which provides private education in China, closed 2 per cent higher in debut trade at HK$ 2.1, after surging as much as 10.7 per cent from its IPO price of HK$2.05 in the morning trading session.

However, four of the top five most active shares in the city declined, with Tencent easing back 1.5 per cent to HK$ 207.0, while AIA Group, the world’s third-largest life insurer by market value, falling 2.1 per cent to HK$49.1. Hong Kong Exchange and Clearing declined 1.4 per cent to HK$192.7 after reporting a 27 per cent year on year drop in net profit on Monday.

Sun Hung Kai Properties, Hong Kong’s largest developer by market value, dropped 1.1 per cent to HK$113.5. The developer said after the market close that its half-year underlying earnings rose 57 per cent.

Investment sentiment in Hong Kong was pressured on Tuesday as investors remained cautious ahead of President Trump’s address to lawmakers. President Trump will deliver his fiscal budget to Congress on Tuesday evening in Washington. Market watchers will take a wait-and-see attitude for details on tax reform and infrastructure policy, areas where the Trump administration has promised sweeping changes.

“Investors should closely monitor the movement of US treasury bond yields, the US dollar and the yuan. If yields surges sharply, the Dollar Index Spot hits a high level, or the yuan slides quickly, Hong Kong may see more sell-offs and we may see the Hang Seng Index hovering around 24,000,” said Ben Kwong Man-bun, executive director of KGI Asia.

“The volatile emotion in Europe and US may inversely drive capital inflows into emerging markets including Hong Kong,” said Victor Au, the chief operating officer at Delta Asia Financial.

For February, Hong Kong stocks gained 1.63 per cent, adding to gains in January when the index rallied 6.18 per cent.

In mainland action on Tuesday, the Shanghai Composite Index inched up 0.4 per cent to 3,241.7 . The CSI 300, which tracks large companies in Shanghai and Shenzhen, rose 0.2 per cent to 3,452.8.

The Shenzhen Component Index gained 0.4 per cent to 10,391.3, while the Nasdaq-like ChiNext was flat at 1,927.2.

Logistics and delivery companies led the rally, offsetting a drop in steel and liquor stocks.

SF Express shares jumped 10 per cent in Shenzhen, rising by its daily limit for a fourth straight day. The share ended at 66.8 yuan. The company completed its back-door listing on Friday after buying Shenzhen-listed Maanshan Dingtai Rare Earth & New Material Co.

Zhejiang People Culture, a takeover target of mainland actress Zhao Wei, slumped 10 per cent in Shanghai to 15.2 yuan, as securities regulators announced plans late on Monday to investigate the company.

Jiangsu Ankura Smart Transmission Engineering Technology, a manufacturer of high-voltage connectors and components, jumped by its allowable 44 per cent limit to 35.11 yuan, from an offering price of 24.38 yuan, in debut trade in Shenzhen.