China shares recover as central bank yuan support lifts investor mood

Hong Kong stocks also rise, with Tencent and telecoms firms among the big gainers

PUBLISHED : Tuesday, 04 September, 2018, 6:53pm
UPDATED : Tuesday, 04 September, 2018, 6:53pm

Mainland Chinese stock markets rose on Tuesday after the central bank acted to bolster the yuan currency, giving sentiment a boost amid a series of issues that have left many investors unsettled.

At the close, the Shanghai Composite had risen 1.1 per cent, or 29.85 points, to 2,750.58, bouncing back from Monday’s drop to near a 30-month low set in August. The CSI 300 Index of big caps gained 1.3 per cent, or 42.07 points, to 3,363.90, while the ChiNext gauge of smaller companies edged up 0.8 per cent, or 11.81 points, to 1,455.50.

Before the market open, the yuan edged up against the US dollar after the People’s Bank of China set the midpoint rate at 6.8183 per dollar, 0.24 per cent higher than the previous fix. That triggered a round of bargain hunting in stocks after recent falls, said Francis Lun, chief executive officer of Geo Securities.

He also noted that the improved mood had offset concerns over draft rules by the China Securities Regulatory Commission released on Friday for a trading link between the Shanghai and London stock exchanges. The plan has raised the question of whether money would flow out of Chinese stocks.

“There is a Chinese saying: the thunder is big but the rain is very small – a lot of sound but little substance. It is like the Hong Kong-China connect – not as big as was expected,” he said.

Meanwhile, concerns over turbulence in emerging markets would be restricted to Argentina and Turkey with East Asia seeing minimal impact, he said.

In Hong Kong, the Hang Seng Index gained 0.94 per cent, or 260.80 points, to 27,973.34, but was unable to recover the 28,000 level amid lingering concerns over the ongoing US-China trade war and its impact on the city. The Hang Seng China Enterprises Index rose 0.71 per cent, or 77.06 points, to 10,890.63.

Among movers, Tencent rebounded with a 1.74 per cent rise to HK$338.60, in its first gain in five days. The technology giant is one of the key investors in Meituan Dianping, China’s largest online services platform, which is planning a US$4.4 billion initial public offering in Hong Kong. It would be the city’s second big tech float this year, after mobile phone maker Xiaomi.

CK Asset, one of the flagship companies of the Cheung Kong conglomerate, rose 4.78 per cent to HK$58.15 after it said it had bought back 1.8 million shares for HK$100.2 million (US$12.8 million). Its sister company, CK Hutchison Holdings, gained 3.1 per cent to HK$91.25.

Telecoms gained traction late in the day after Bloomberg reported that the Chinese government may engineer a merger between carriers to boost its push into advanced 5G mobile networks. China Unicom climbed 5.86 per cent to HK$9.58, having reached a 30-day high of HK$9.77 earlier in the session and leading gains on the Hang Seng Index. China Telecom rose 4.01 per cent to HK$3.89.

Mainland Chinese banks were heavily traded throughout the day, seeing slight gains by the close. China Construction Bank ended up 0.58 per cent at HK$6.97, Bank of China rose 0.28 per cent to HK$3.53 and Industrial and Commercial Bank of China ended up 0.35 per cent to HK$5.79.

Insurer Ping An, which saw the second highest turnover, rose 1.25 per cent to HK$76.80.