Hong Kong and mainland stocks end rough week on the up, but ‘end of tunnel not visible right now’
Hong Kong and mainland stocks closed Friday’s trading session slightly higher after a rough week where some major indexes dropped to six-month lows, because of fears over a potential escalation in the US-China trade war.
On Monday, US President Donald Trump threatened to impose fresh tariffs on Chinese goods worth US$200 billion, triggering a worldwide market rout.
“The market is currently directionless despite looking to Wall Street, China and the US administration for further developments. There is still lots of investor uncertainty over the potential trade war and stalled US-China negotiations,” said Louis Tse Ming-kwong, director at Hong Kong-based VC Brokerage.
“The leaders involved will eventually have to settle for a compromise, otherwise global trading will be in a state of chaos. The end of the tunnel is not visible right now, but maybe sometime in the middle of July we’ll be able to see it.”
Hong Kong’s benchmark Hang Seng Index added 0.15 per cent, or 42.65 points, to 29,338.70. It faced a weekly drop of 2.97 per cent, its worst since the week of March 23, when the Trump White House first slapped trade sanctions on US$50 billion worth of Chinese products. The Hang Seng China Enterprises Index shed 0.22 per cent, or 24.79 points, to 11,339.87.
Losses were led by the transport and logistics sector, but oil and gas shares gained ground because of a rise in oil prices ahead of the Opec meeting in Russia on Friday. Hong Kong freight company Janco Holdings shed 8.51 per cent to HK$0.21, while state carrier Air China also declined by 3.34 per cent to HK$8.67. Shares in oil investment company JTF International surged by 15.58 per cent to HK$0.89, while Sino Oil and Gas also increased by 5.56 per cent to HK$0.04.
Among blue chip stocks, Sunny Optical rebounded slightly from yesterday’s losses, gaining 2 per cent to HK$145.90. HSBC shares stayed completely flat at HK$74.40, while Tencent Holdings shares gained by 0.15 per cent to HK$397.40. Geely Auto lost 0.9 per cent to HK$21.70.
ZTE shares gained 1.37 per cent to HK$11.86, despite US Senate Republicans voting on Monday to uphold a ban on selling US parts to the Chinese telecoms maker, effectively crippling its business.
“I expect a rebound in the Hang Seng Index, but at the moment there is not enough relative turnover since investors are setting money aside for many upcoming IPOs launching in Hong Kong,” said Kwong. “Since it is near half-year results season, hopefully positive company announcements can maintain the 250-day moving average of 29,230 and pull up the market.”
On the mainland, Chinese equities lost about US$514 billion in total market value this week – equal to Sweden’s total GDP – and the yuan’s value slid for the seventh day in a row, prompting expectations the Chinese central bank would intervene.
The Shanghai Composite Index, 4.37 per cent lower, saw its worst weekly losses since January 2016, and the CSI 300 lost 3.85 per cent this week – its worst drop since February. The Shenzhen Component Index fared particularly badly, losing 5.36 per cent this week.
Major Chinese indexes, however, saw incremental gains by the end of Friday’s trading session, but not enough to rebound completely from Tuesday’s widespread sell-off that saw more than 1,000 shares dip below their 10 per cent daily trading limit.
The CSI 300, which tracks large caps listed in Shanghai and Shenzhen, increased by 0.44 per cent, or 15.94 points, to 3,608.91, while the Shanghai Composite Index also added 0.49 per cent, or 13.95 points, to 2,889.76.
The Shenzhen Component Index rose by 1 per cent, or 93.27 points, to 9,409.95 and the Nasdaq-style ChiNext Price Index gained 1.84 per cent, or 27.98 points, to 1,549.66.
The US administration has formally imposed tariffs on US$34 billion worth of Chinese imports, set to go in effect on July 6, while China last week retaliated with tariffs on US$34 billion of US goods.
Major Wall Street indexes faced losses all round overnight on Thursday, as the Dow Jones Industrial Average fell by 0.8 per cent to 24,461.70 points, and the S&P 500 lost 0.63 per cent to 2,749.76 points. The Nasdaq wiped out Wednesday’s slight gains, losing 0.88 per cent to 7,712.95 points.