Hang Seng Index

Hong Kong close higher after gains in carmakers Geely and BYD, China markets also rise

Investors do not see much any change from the US Federal Reserve’s interest-rate setting meeting and are betting that Chinese authorities will act to stabilise markets ahead of an important leadership congress

PUBLISHED : Wednesday, 20 September, 2017, 9:09am
UPDATED : Wednesday, 20 September, 2017, 8:45pm

Hong Kong stocks ended higher on Wednesday, lifted by strong gains in Chinese carmakers, while China Unicom also rose after reporting strong growth in mobile users for last month.

Sentiment was also bolstered by expectations that Beijing will ensure stable financial markets ahead of its important 19th National Congress of the Communist Party of China, on October 18.

“Xi noted that development and stability were the absolute principles, so both should be dealt with by strong hands,” state media Xinhua said.

The Hang Seng Index rose 0.3 per cent to 28,127.8. About 104 stocks touched their highest levels in 52-weeks. The Hang Seng China Enterprises Index, known as the H-share index, was up 0.4 per cent to 11,125.71. Daily turnover was HK$97.52 billion,

The strength of their electric vehicle businesses saw carmakers continue their run of popularity that began when China announced earlier this month it was considering a ban on petrol and diesel cars.

BYD, China’s biggest electric vehicle maker, soared 12.5 per cent to HK$68.8, its highest since May 2010. Geely Auto, a Hang Seng Index component, was the top gainer among blue-chip stocks, up 5.7 per cent to a record high of HK$24.00. It added 22 points to the Hang Seng Index. Dongfeng Motor Group rose 4.6 per cent to HK$10.56.

Internet giant Tencent was the most heavily traded, and rose 0.6 per cent to HK$346.40.

Elsewhere, China Unicom jumped 3.8 per cent to HK$11.44. The telecoms operator said the number of its 4G mobile users grew by 7.5 million in August, a 17 per cent jump from the previous month. BOC International and Jefferies both reiterated their buy ratings for the stock.

Sunac however dropped 2.8 per cent to HK$36.55. The Chinese property developer denied a media report that China Huarong Asset Management was temporarily suspending new loans to the company amid tightening regulatory scrutiny.

Banks saw some losses, with Minsheng Bank dropping 0.5 per cent to HK$7.7, Agricultural Bank of China down 0.3 per cent to HK$3.56 and Bank of East Asia edging lower 0.1 per cent to HK$34.4.

Investors are also anticipating that the meeting of the US Federal Reserve’s Federal Open Market Committee (FOMC) that begins tonight will not be a big event for markets because the Fed’s plans for balance sheet reduction have been widely flagged. The central bank is also widely expected to leave interest rates unchanged.

In China, the Shenzhen Composite Index and the Nasdaq-style ChiNext Price Index climbed 0.8 per cent and 0.7 per cent respectively to 2,012.23 and 1,892.67. The Shanghai Composite Index rose 0.3 per cent to 3,366.00 and the large-cap CSI300 index added 0.3 per cent to 3,842.44.

Shanxi Securities retreated on Wednesday, falling 0.2 per cent to HK$11.69 and Guoyuan Securities dropped 0.2 per cent to HK$14.42.

But analysts said sentiment in securities firms remains strong given the growth in leveraged buying and stock turnover. Leveraged investors increased their stock buying, pushing the outstanding balance of margin trading to a 20-month high this week, while the number of new stock investors increased at the fastest pace in almost five months last week.

On Tuesday in the US, the S&P 500 index ticked 0.1 per cent higher to close at 2,506.65, a third record high in a row. The Dow Jones Industrial Average rose 0.2 per cent to 22,370.80, marking a six-day streak of record closes, while the Nasdaq Composite finished up 0.1 per cent at 6,461.32, also an all-time high.