Hong Kong, mainland stocks eke out small gains as boost provided by US-China trade truce fades

  • Gordon Tsui, managing director of Hantec Pacific, says short term sentiment will remain positive and the Hang Seng Index will cross 28,000 in two weeks’ time
PUBLISHED : Tuesday, 04 December, 2018, 5:58pm
UPDATED : Tuesday, 04 December, 2018, 6:10pm

Hong Kong and mainland markets made marginal gains on Tuesday, continuing Monday’s rebound albeit with less steam, following hopes over trade war negotiations.

The Hang Seng Index ended up 0.29 per cent, or 78.40 points, to 27,260.44, while the Hang Seng China Enterprises Index gained 0.23 per cent, or 25.38 points, to 10,907.54.

On the mainland, the benchmark Shanghai Composite Index edged up 0.42 per cent, or 11.69 points, to 2,665.96. The CSI 300 of large caps rose 0.21 per cent, or 6.76 points, to 3,267.71, while the ChiNext was up 0.43 per cent, or 5.96 points, to 1,378.75.

Both China and Hong Kong’s benchmarks made only slight moves throughout the day.

“Market sentiment is still positive due to the atmosphere of the trade war negotiations, but at least for the coming three months the market will still fluctuate over uncertainty on whether the negotiations will go smoothly or not,” said Gordon Tsui, managing director of Hantec Pacific.

Over the weekend at the G20 summit in Argentina, US President Trump and his Chinese counterpart Xi Jinping agreed on a 90-day truce on the trade war, to allow time for negotiations. If the two countries fail to strike a deal at the end of the agreed period, which starts on January 1, the US said it would go ahead with its tariff increase on US$200 billion worth of Chinese imports from 10 per cent to 25 per cent.

Hopes of an impending agreement raised markets globally, which have been volatile throughout the year. Shanghai and Hong Kong’s benchmark indices have dropped by nearly 20 per cent and 10 per cent, respectively, since January.

Tsui said short term sentiment will remain positive and the Hang Seng Index will reach over 28,000 in the coming two weeks, but longer term stability is still questionable.

Already on Tuesday it seemed some stocks had lost some momentum.

Telecommunications equipment giant ZTE, which was temporarily banned by the US from buying parts from American suppliers for three months this year, continued to be positive ending up 0.72 per cent to HK$16.86, though gains were marginal in comparison to its 7.9 per cent jump on Monday.

Some technologies, however, lost out. Among the biggest losers were Apple suppliers Sunny Optical Technology (Group) and AAC Technologies Holdings dropped 2.09 per cent to HK$79.80 and 2.07 per cent to HK$56.70 respectively.

Carmakers continued their upwards path from Monday after Trump had tweeted China agreed to reduce and remove the current 40 per cent tariffs on imported cars from the US.

BAIC Motor was up 5.77 per cent to HK$4.95, while Zhongsheng Group Holdings gained 4.95 per cent to HK$17.40, Brilliance China Automotive Holding rose 3.01 per cent to HK$7.18 and Great Wall Motors ended up 1.74 per cent to HK$5.25.

Notable on Tuesday was Hong Kong developer Rivera Holdings which soared 54.5 per cent during the day to 85 HK cents, its highest level since July 1988, before later trimming gains to end at 58 cents. This came after a major shareholder, Step Famous Investment which owns almost 30 per cent of the company, made a cash offer to buy outstanding shares at 55 cents each, valuing Rivera at HK$1.43 billion. The stock is up over 7 per cent this year.

Other developers such as mainland firm Jingrui Holdings also rose 4.3 per cent to its highest level since October 2 in its seventh straight run. It has agreed to set up a joint venture with Chinese partners to acquire and redevelop a commercial office space in Hong Kong. The stock has risen almost 20 per cent this year, and outperformed the Hang Seng Property Index by 5.9 percentage points in the past month.