China stock market

Hong Kong stocks close higher as insurers gain, but weak US retail sales figures limit market’s rise

Insurance firms seen benefiting from clearer framework after Beijing merges financial regulators, while analysts expect strong earnings from top two firms

PUBLISHED : Thursday, 15 March, 2018, 9:06am
UPDATED : Thursday, 15 March, 2018, 7:16pm

Hong Kong stocks closed higher on Thursday, with mainland Chinese insurance firms in the lead on hopes that a shake-up by Beijing of the regulatory environment will benefit the sector and ahead of earnings reports by the two top firms.

The Hang Seng Index rose 0.34 per cent, or 106.09 points, to close at 31,541.10, recovering some of its 1 per cent drop in early trading. The Hang Seng China Enterprises Index, or the H-share measure, added 0.28 per cent to close at 12,719.84.

The 15 insurance companies listed in Hong Kong rose on average 1.4 per cent, the best among all industry sectors. Ping An Insurance Group jumped 3.4 per cent per cent to HK$88.95, CPIC rose 3 per cent to close at HK$40 while China Taiping advanced 1.5 per cent to HK$30.55. China Life gained 0.43 per cent to HK$23.35.

“The merger between the banking and insurance regulators would bring a better regulation across the insurance industry, which would benefit particularly the big players such as Ping An Insurance and China Life. The top two mainland insurers will announce results next week, which are expected to be good. This also driven their share price up,” said Louis Tse Ming-kwong, a managing director of VC Wealth Management.

As part of a major revamp of the central government announced earlier this week, the China Insurance Regulatory Commission (CIRC) and China Banking Regulatory Commission (CBRC) will be merged into a single entity.

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China Life and Ping An will report full-year results next week.

Also adding to insurers’ gains was Prudential, which rose 5.3 per cent to close at HK$210.60 after it announced on Wednesday that it planned to spin off its business in Britain and Europe from its international operations, a move aimed at better focusing on faster growing markets such as Asia and the United States.

Elsewhere, property developer Country Garden rose 3.9 per cent to close at HK$15.82, the biggest gainer on the Hang Seng Index, pork company WH Group added 2.9 per cent to HK$9.57 and Sunny Optical Technology Group climbed 2.5 per cent to HK$145.80.

Cathay Pacific Airways surged 4.6 per cent to close at HK$14.42, as UBS Group and JPMorgan Chase lifted their ratings on the stock after the Hong Kong carrier unexpectedly reported a second-half profit for 2017.

China Mengniu Dairy was the worst performer, slumping 3.8 per cent to HK$25 after Goldman Sachs cut its recommendation on the stock to neutral from buy.  

Telecoms firm China Unicom Hong Kong slipped 0.9 per cent to HK$9.54, declining for a third consecutive session. After the close on Thursday it reported full-year earnings rose 192 per cent to 1.83 billion yuan (US$289.7 million).

Overall market gains were held in check by concern over the sustainability of growth in US economy after data showed a drop in retail spending.

“February’s dreary US retail sales delivered more disappointment to the markets,” said Stephen Innes, Singapore-based head of trading for Asia-Pacific at Oanda. “Risk-off continues to seep through markets as traders scramble to revise both inflation and US growth forecasts in the wake of tepid CPI and PPI prints.”

Investors are also cautious ahead of a decision on US interest rates at the Federal Reserve’s meeting next week. Forecasts compiled by Bloomberg suggested there was now an 84 per cent probability the Fed would raise the benchmark borrowing rate by a quarter of a percentage point at the meeting. 

February’s dreary US retail sales deliver more disappointment to the markets
Stephen Innes, Singapore-based head of trading for Asia-Pacific at Oanda

In mainland China, the Shanghai Composite Index edged down 0.01 per cent to close at 3,291.11, while the CSI 300 Index, which tracks larger companies listed in Shanghai and Shenzhen, gained 0.56 per cent to close at 4,096.16. 

The Shenzhen Component Index rose 0.22 per cent to close at 11,163.65 and the ChiNext gauge of smaller companies closed 0.4 per cent higher at 1,848.72, reversing a drop of 0.8 per cent in early trade and a 1.7 per cent decline on Wednesday.

Chinese liquor distillers were among gainers, with Kweichow Moutai gaining 2.7 per cent to 746.47 yuan and Wuliangye Yibin adding 3.2 per cent to 78 yuan.