Hong Kong stocks rise most in a week as chip shares gain on China industry development hopes

Comments from the Hong Kong Monetary Authority on its recent currency intervention help buoy sentiment

PUBLISHED : Thursday, 19 April, 2018, 9:21am
UPDATED : Thursday, 19 April, 2018, 10:52pm

Hong Kong stocks rose on Thursday as the local currency posted its biggest intraday gain in two months and semiconductor companies jumped after Beijing’s official People’s Daily newspaper called for the development of China’s own chip-making industry.

The benchmark Hang Seng Index added 1.4 per cent, or 424.19 points, to 30,708.44, while the Hang Seng China Enterprises Index, known as the H-share gauge, advanced 2.1 per cent. The mainland’s Shanghai Composite Index rebounded for a second day.

Sentiment got a boost after the Hong Kong Monetary Authority said it had successfully defended the local dollar’s peg to the greenback by making 13 interventions costing a total of HK$51 billion (US$6.5 billion). The currency rose as much as 0.07 per cent to HK$7.8441 to the US dollar on Thursday, the biggest intraday gain since January 17. One-month Hibor, a gauge of fund costs in the Hong Kong interbank market, climbed by 3.9 basis points to 0.95 per cent, adding to an increase of almost 16 basis points over the past week.

“Investors welcomed the transparency the HKMA showed,” said Louis Tse Ming-kwong, managing director at VC Asset Management.

The intervention by the monetary authority when the Hong Kong dollar breached the 7.85 threshold against the greenback have been smooth so far and there is no sign of massive shorting of the currency, said Howard Lee, deputy chief of the city’s de facto central bank, at a media briefing on Thursday.

Semiconductor stocks led the gains across the board after the People’s Daily published an article stressing the importance of developing China’s own chip industry in light of the US ban on Chinese telecom giant ZTE buying components from American companies.

Hua Hong Semiconductor jumped 10 per cent to HK$19.16 at close of trade, Semiconductor Manufacturing International Corp rose 2.9 per cent to HK$10.72 and Shanghai Fudan Microelectronics Company added 2.7 per cent to HK$7.30.

“But the fundamentals in the semiconductor industry won’t improve in the short term, which means it will be hard to maintain the stock gains,” said Tse.

Elsewhere, energy stocks rose as oil prices hit three-year highs. China Oilfield Services surged 8.2 per cent to HK$9.01. PetroChina climbed 5.7 per cent to HK$5.94 and CNOOC added 4.4 per cent to HK$13.24. Brent crude oil jumped to US$3.93 on Thursday morning, the highest since November 2014.

In mainland China, the Shanghai Composite rose 0.8 per cent, or 25.98 points, to 3,117.38. The CSI300 – which tracks big caps in Shanghai and Shenzhen – increased 1.2 per cent, while the Nasdaq-style ChiNext gauge slipped 0.1 per cent.

Leshi Internet Information & Technology, the embattled conglomerate that is grappling with mountains of debt, jumped by the 10 per cent daily cap to 5.12 yuan in Shenzhen after saying its television-making unit had secured a total of 1.2 billion yuan (US$159.3 million) funding from investors including Tencent Holdings and online retailer