Hang Seng Index clocks up fifth consecutive quarterly increase

But it’s certainly been a roller coaster start to 2018, with shares ebbing a flowing throughout the first three months

PUBLISHED : Thursday, 29 March, 2018, 9:23am
UPDATED : Thursday, 29 March, 2018, 6:59pm

Hong Kong’s Hang Seng Index has ended the first quarter of 2018 slightly ahead – the fifth quarter to grow in a row, marking the longest winning streak based on three months since December 1996.

But it’s been a roller coaster start to the year.

At the end of January, the benchmark gauge hit a record high of 33,484 before sliding to a seven-week low of 29,129 in February, then retracing slightly higher thereafter.

On Thursday, the index edged up 0.24 per cent to 30,093.38, erasing Wednesday’s losses and moving in line with mainland markets.

The Hang Seng China Enterprises Index, known as the H-shares index, also advanced 2.47 per cent in the first quarter, again the fifth quarter in a row, after closing on Thursday virtually unchanged at 11,998.34.

While concerns about a US-China trade war have eased, investors remained cautious.

“There was a market rebound today [Thursday] because positive Chinese policies were announced, but sentiment remains very unstable,” said Stanley Chan, director of research at Emperor Securities. “The Hang Seng Index is struggling to stay above the psychological 30,000 level.”

Buying was also tempered ahead of the Hong Kong market’s Easter holiday, from Friday to next Monday. The Shanghai and Shenzhen-Hong Kong Stock Connects will be closed from March 30 to April 8, meaning there will be no links to buy equities in the city from the mainland next week.

On Thursday, Mengniu Dairy was the best performing blue chip, surging 6.96 per cent to HK$26.90 (US$4.28) after swinging to profit last year with net income of 2.05 billion yuan (US$325.98 million). AIA Group climbed 1.69 per cent to HK$66.40, adding 43 points to the mainboard index.

Sunac China climbed 1.34 per cent to HK$30.30, after reporting its net profit had increased more than fourfold last year to 11 billion yuan. But the developer also said it has set aside 9.98 billion yuan for possible losses related to its investment and guarantees in the debt-laden Leshi Internet Information and Technology.

Other blue chips remained weak. Index heavyweight Tencent Holdings lost 0.63 per cent to HK$409.60, extending a recent sell-off, after stock exchange records showed Martin Lau, its president and executive director, had sold a million shares at HK$434.36 apiece. Lau still holds 46 million shares, a 0.48 per cent stake. Tencent has fallen more than 10 per cent since last Wednesday.

Selling pressure also continued on other technology shares in Hong Kong following recent turmoil in US tech stocks. AAC Technologies lost 0.35 per cent to HK$141.60, and Sunny Optical Technology slid 1.70 per cent to HK$144.90.

Ping An Insurance (Group) eased 0.44 per cent to HK$79.80.

While Most Kwai Chung, the online media platform, plunged 45.45 per cent on its second day of trading, closing at HK$3.48. The share soared sixfold on Wednesday, the best debut-day performance in history for a stock on the main board.

Analysts called the overwhelming market response “speculative”, given its small fundraising size and huge oversubscription. The initial share price surge “is not sustainable”, said Alex Wong, director for asset management at Ample Capital.

In mainland trading, the Shanghai Composite Index widened gains to 1.23 per cent at 3,160.53. The large-cap CSI300 rose 1.34 per cent to 3,894.05.

Chinese state radio reported late on Wednesday that China would lower its value-added tax rate on the manufacturing, transport, construction, telecommunication and agricultural sectors from May 1.

The VAT cuts are expected to save 240 billion yuan (US$38 billion) in taxes this year, according to the report, which cited China’s State Council.

“China’s tax cuts provide comfort to the markets somewhat. But we still need to see what the new US tariffs will finally be,” Chan said.