Breaking | Hong Kong, China stocks rebound to finish higher on hopes Beijing will act to limit trade war damage
Hong Kong and mainland China markets bounced back from earlier losses to finish higher on Tuesday after the US unveiled a new round of tariffs on US$200 billion worth of imported Chinese goods..
Analysts said sentiment was buoyed by hopes that the Chinese government would take measures to stabilise the economy amid a protracted trade war with the US.
“The Hang Seng Index rebounded and is establishing a near-term support at about the 26,200 level,” said Stanley Chan, director of research at Emperor Securities. “Yesterday’s market drop had mostly priced in the new tariffs, while China may launch more stimulative measures to stabilise the economy.”
The benchmark Hang Seng Index rose 0.6 per cent, or 151.81 points, to 27,084.66 after dropping by as much as 1.1 per cent earlier in the day. It remains down by 19 per cent down from its January peak.
The Hang Seng China Enterprises Index was up 0.9 per cent, or 94.89 points, at 10,556.98.
The Shanghai Composite Index on the mainland gained 1.8 per cent, or 48.16 points, to 2,699.95 points. The gauge had dropped 1.1 per cent to close at its lowest level in more than three years on Monday.
The Shenzhen Component Index rose 1.7 per cent, or 133.87 points to 8,133.22. The CSI 300, which tracks the largest stocks listed in Shanghai and Shenzhen, advanced 2 per cent, or 64.51 points, to 3,269.43.
Hong Kong-listed construction and cement stocks led the advances. China Communications Constructions rose 7 per cent to HK$7.82. Anhui Conch Cement climbed 5.1 per cent to HK$45.30 after UBS gave the firm a “buy” rating last week. China Resources Cement Holdings surged 7.3 per cent to HK$9.24 and Asia Cement (China) Holdings was 4 per cent higher at HK$7.58.
The National Bureau of Statistics revealed last week that cement production nationwide hit 1.38 billion tons in August, up 0.5 per cent from a year earlier.
Chinese financial firms also fared well on Tuesday. Ping An Insurance gained 1.1 per cent to HK$75.35, China Construction Bank was up 0.5 per cent to HK$6.54, and Industrial & Commercial Bank of China gained 0.7 per cent to HK$5.46.
Ben Kwong Man-bun, a director at KGI Asia, said the phased-in approach of the new round of tariffs was likely to limit any damage to the Chinese economy. A 10 per cent tariff on about US$200 billion worth of Chinese imports will apply from next Monday, and subsequently rising to 25 per cent on January 1.
That also showed that Trump did not want to see Chinese import prices rising substantially before the Christmas sales season, Kwong added.
Technology stocks were mixed on Tuesday. Smartphone lens maker Sunny Optical Technology rose 1.5 per cent to HK$92.30 0, FIT Hon Teng was higher by 1.9 per cent to HK$3.77 while AAC Technologies was flat at HK$77.55.
Internet giant Tencent Holdings pared losses but remained 0.4 per cent lower at HK$318 on Tuesday.
The biggest loser among blue chips was Geely Automobile Holdings, China’s third largest carmaker. The stock finished the day lower by 3.9 per cent at HK$14.14 after Morgan Stanley cut its target price by half from HK$20 to HK$10.
Citigroup said in a research report that given 5,745 items of Chinese imports will be hit with an additional 10 per cent tariff, the nation’s GDP growth is likely to be dragged down by 33 basis points.
