Hong Kong stocks post biggest weekly gain in a month
Naming of Jerome Powell as the next Fed chairman lifts investor sentiment
Hong Kong’s stocks rose on Friday, capping the best weekly performance in a month, on optimism that the incoming Federal Reserve chairman will continue a gradual approach to raising interest rates. Tencent Holdings climbed to a record high after Morgan Stanley raised the price target for the stock provided a further boost.
The Hang Seng Index advanced 0.3 per cent, or 84.97 points, to 28,603.61 at the close, adding to a 0.6 per cent gain for the week. The Hang Seng China Enterprises Index, or the H-share gauge, edged up less than 0.1 per cent to 11,602.40. Mainland’s benchmark stock gauge pared a loss of as much as 1.1 per cent in the final 30 minutes of trading on strength from financial companies.
US President Donald Trump on Thursday nominated Jerome Powell to become the next Fed chairman, succeeding Janet Yellen whose four-year term expires in February. Powell, currently a member of the Federal Reserve board of governors, backs continuing gradual interest rate increases. The Dow Jones Industrial Average closed at a record high on Thursday.
“Market sentiment was steady today, as Trump’s decision on the next Federal Reserve chair was in line with expectations,” said Stanley Chan, a director of research at Emperor Securities. “Investors are less worried about the balance-sheet unwind and interest-rate hike ahead, because Powell is likely to continue the previous monetary policies.”
The Hang Seng Index, the best performer among Asia’s major markets this year with a 30 per cent gain, has been consolidating since it rose to an almost 10-year high last month. A rise of 2.2 per cent from Friday’s close would take the benchmark beyond its highest level since December 2007.
Tencent, which has the biggest weighting on the Hang Seng Index, rose 1.7 per cent to HK$368.
Morgan Stanley raised the stock’s 12-month price target by 14 per cent to HK$420, estimating the Chinese internet giant will post record game revenues in the third quarter, buoyed by the continuing momentum in the world’s top-grossing mobile game Honour of Kings. Tencent’s third-quarter result is due on November 15.
Wharf (Holdings) jumped 4 per cent to HK$74.75. The property developer said it would propose to the board of directors a plan this month to spin off its core commercial assets for separate listing, and distribute a conditional special interim dividend.
Link Reit rose 1.7 per cent to HK$65.10 after Goldman Sachs raised its target price for the property investment trust by 2.5 per cent.
On the mainland, the Shanghai Composite Index dropped 0.3 per cent, or 11.57 points, to 3,371.74. The decline of 1.3 per cent this week is its worst in three months because of liquidity concerns after the yield on China’s 10-year government bonds rose to a three-year high.
Companies related to Qihoo 360 Technology’s back-door listing on the Shanghai exchange jumped on Friday. Qihoo was taken private in the US market last year. The Chinese internet-security service firm would achieve its listing status on the mainland’s A-share market through a reverse merger with lift maker SJEC.
Hunan TV & Broadcast Intermediary advanced 6 per cent to 10.55 yuan. The company said in 2015 that it planned to invest 300 million yuan (US$45.3 million) in Qihoo 360 through an investment fund.
Citic Guoan Information Industry added 2.3 per cent to 11.45 yuan because of its link with Qihoo 360’s privatisation.