Markets remain wary as trade talks stall and Trump claims upper hand

Hang Seng ends week up 1.16pc from last week at 27,286.41, reversing a 3.28pc fall to levels last seen in August 2017

PUBLISHED : Friday, 14 September, 2018, 6:39pm
UPDATED : Friday, 14 September, 2018, 6:39pm

Hong Kong stocks climbed on Friday while mainland markets ended mixed, as speculation over the brewing China-US trade war, and possible to resolve it, continued to dominate investor sentiment.

On Thursday, US President Donald Trump boasted via Twitter that he had the upper hand in the stand-off and felt no pressure to solve his feud with Beijing.

Commentators read the comments as dampening the prospects of a new round of talks between the two economic giants, which were proposed by US Treasury Secretary Steven Mnuchin on Wednesday.

“After yesterday’s very strong rebounds, investors are mostly focused on the chance of US-China negotiations happening, which might have eased uncertainties in the market,” said Castor Pang Wai-sun, head of research at Core Pacific-Yamaichi.

“Over the next fortnight the markets will continue to have the momentum to rebound – but that will depend on whether negotiations start.”

Over the next fortnight the markets will continue to have the momentum to rebound – but that will depend on whether negotiations start
Castor Pang Wai-sun, head of research at Core Pacific-Yamaichi

The Hang Seng Index ended the week up 1.16 per cent from last week, reversing a 3.28 per cent fall to levels last seen in August 2017.

On Friday the index rose 0.01 per cent, or 271.92 points, to 27,286.41, extending gains to climb for a second straight session after six days of losses.

The Hang Seng China Enterprises Index gained 0.69 per cent, or 72.16 points, to 10,575.17.

But uncertainty over when negotiations might actually kick off led to a low turnover of HK$37.87 billion (US$4.82 billion), said Pang.

“It seems some investors are putting their money back into the market,” said Pang.

In mainland trading, the benchmark Shanghai Composite Index closed down 0.18 per cent, or 4.94 points, to 2,681.64. Its third consecutive weekly fall, the drop was fuelled by mixed August economic data which failed to curb worries over the economy, said analysts.

The CSI 300 – which tracks large caps – edged up 0.17 per cent, or 5.52 points, to 3,242.09 while the ChiNext gauge of smaller companies dropped 1.5 per cent, or 20.88 points, to 1,370.40.

In Hong Kong, both casino and technology shares have seen significant rebounds after drops earlier in the week, as investors bought in on cheap valuations and lower share prices.

MGM China added 6.64 per cent to HK$12.52, followed by Wynn Macau and Sands China, which rose 6.42 per cent to HK$19.24 and 4.14 per cent to HK$35.20, respectively.

Melco International Development, the largest shareholder in Macau entertainment resort Studio City, also ended up 4.1 per cent to HK$16.24, while Galaxy Entertainment rose 3.85 per cent to HK$49.85.

Macau casinos are set for a 50 per cent rebound, according to a research note by Morgan Stanley’s Praveen Choudhary and Jeremy An on Thursday.

Based on a previous cycle which ended in July 2012, shares will recover on improved earnings, followed by a sharp correction, they wrote.

Technology shares pushed stocks higher for a fourth day overnight in the US, and the sector followed suit in Hong Kong with a 2 per cent increase on Friday.

AAC Technologies was the highest gainer among blue chips ahead 5.51 per cent at HK$82.40, while handset component manufacturers BYD Electronics added 8.2 per cent to HK$9.77 and fellow Apple supplier Sunny Optical gained 3.23 per cent to HK$96.00.

China Display Optoelectronics Technology revealed it had passed the “qualifications of one of the world’s leading smartphone manufacturers, to produce display module products” to be used in its end products.

It estimated orders from the major new, yet-unnamed, customer will account for 10-20 per cent of its overall sales volume in 2018, it added, boosting the stock 12 per cent to HK$0.56.

Hong Kong’s CK Infrastructure Holdings, meanwhile, is considering listing some of its UK assets through a potential multibillion-dollar London IPO, according to Bloomberg.

CKI Holdings gained 2.45 per cent to HK$62.70. Sister company CK Asset also rose, closing the week up 3.03 per cent to HK$59.45.