Hong Kong and mainland stocks rise after China’s export data blow past estimates

Hang Seng Index rises 1.5pc to 30,654.52. The index is 7.5pc below its record high set on January 26

PUBLISHED : Thursday, 08 March, 2018, 9:15am
UPDATED : Thursday, 08 March, 2018, 5:51pm

Hong Kong and mainland stocks ended higher on Thursday after China’s exports significantly exceeded estimates, bolstering optimism about the strength of the world’s second-largest economy.

The Hang Seng Index rose 1.5 per cent, or 457.60 points, to 30,654.52 at the close. The Shanghai Composite Index added 0.5 per cent, or 16.74 points, to 3,288.41. Huaneng Power International Inc and other electricity producers rallied after brokerage research said a cutback in unneeded capacity in the industry will lead to an increase in tariffs.

China’s overseas shipments in yuan terms surged 36 per cent from a year earlier in February, the customs office said on Thursday. That compared with a median estimate of 7.4 per cent growth in a Bloomberg survey and a 6 per cent increase a month earlier. Imports were almost flat with a 0.2 per cent drop, leaving a trade surplus of 224.9 billion yuan (US$35.6 billion) for the month.

“The strong export number has illustrated the fact China’s macro-economy was much better in February than was expected,” said Ken Chen Hao, a strategist at KGI Securities in Shanghai. “But the Hong Kong market is now increasingly sensitive to the ups and downs on overseas markets. It will still be range bound as uncertain factors from overseas remain.”

The Hang Seng Index has been seesawing in an almost 4,000-point range since the start of the year, as the market is whipsawed by the implications of a spike in Treasury yields and jitters about a global trade war following President Donald Trump’s decision to levy tariffs on metal imports. The stocks benchmark is 7.5 per cent shy of a record high set on January 26.

The Hang Seng China Enterprises Index, known as the H-shares gauge, climbed 1.3 per cent.

All 50 blue-chip stocks on the Hang Seng Index rose. Power producers led the charge. China Resources Power Holdings surged 5.9 per cent to HK$13.98 and Huaneng Power soared 6.9 per cent to HK$5.25. Datang International Power Generation rallied 4.2 per cent to HK$2.50. China Power International Development jumped 4.1 per cent to HK$2.02.

Premier Li Keqiang’s government work report delivered to the delegates of the legislative session on Monday indicated policymakers will “vigorously” cut oversupply in the coal-fired power sector this year as part of its efforts to push forward with supply-side reforms, according to Haitong Securities.

CLSA predicts power tariffs will increase in the second half of the year, helping the whole sector return to profit, joining a similar call by Deutsche Bank.

Wynn Macau led gains among casino operators after the company posted an increase in preliminary profit for the January to February period and the parent plans to increase quarterly dividends. The stock rallied 6.6 per cent to HK$28.15.

Sands China and Galaxy Entertainment Group gained 5.7 per cent and 3.6 per cent each to HK$44.90 and HK$68.40 respectively.

In mainland trading, the CSI 300 Index of big caps rebounded 1 per cent and the ChiNext gauge of smaller companies added 0.5 per cent.

A gauge of health care companies gained 2.9 per cent on Thursday for the best performance among the industry groups on prospects of more policy support for the sector from the ongoing legislative meetings. Shanghai Fosun Pharmaceutical Group rose 4.8 per cent to 43.07 yuan and Aier Eye Hospital Group added 4.5 per cent to 40.08 yuan.