Hong Kong’s stock indexes climb on China’s vow to further open financial sector as Mengniu Dairy cheers newly appointed chairman
- AIA Group, the largest insurer listed in Hong Kong, rises 4 per cent to an all-time high
- Apple suppliers advance after the smartphone maker reported better-than-expected first-quarter earnings
Hong Kong stock indexes advanced on the Chinese government’s pledge to open up the country’s financial services sector to foreign competition, while electronic component makers rose on Apple’s better-than-expected quarterly earnings.
The Hang Seng Index rebounded from early losses to close Thursday 0.8 per cent higher at a six-day high of 29,944.18, while the China Enterprises Index rose 0.1 per cent to 11,556.72, the third day of gains out of four. Turnover in Asia’s second-largest capital market shrank 3.3 per cent to HK$71.7 billion (US$9.1 billion), below the daily average of HK$110.6 billion in March.
Trading was halted in the stock markets of Shanghai and Shenzhen to mark Labour Day holidays. The Connect cross-border investment channels between Hong Kong and the two mainland bourses were also closed.
The shares of financial institutions led gains in Hong Kong, with the sector gaining 1.7 per cent, according to Bloomberg data, after China’s government announced on Wednesday that the US$44 trillion financial sector would be further opened to foreign banks and insurers to comply with any deal with the United States to end the year-long trade war between the countries.
The head of China’s banking and insurance regulator said on Wednesday it would push forward with 12 changes in the short term, including allowing overseas insurers to set up units in the country and removing caps on foreign and domestic single shareholders’ investments in local commercial banks.
“The market is focusing on the benefits of the opening up, which is a better-developed market, and not worrying about the greater competition between domestic and international players,” said Kenny Tang Sing-hing, chief executive of China Hong Kong Capital Asset.
AIA Group, the largest insurers listed in Hong Kong by market capitalisation, climbed 4.1 per cent to a record HK$83.25, contributing 120 points to the Hang Seng Index’s gain, the largest among the benchmark’s constituents. Ping An Insurance Group, one of the largest Chinese insurers rose 1.1 per cent.
Europe’s largest bank HSBC rose 0.8 per cent, while Standard Chartered jumped 3.2 per cent. Most of China’s biggest banks gained too. China Construction Bank added 0.4 per cent, and the Bank of China inched up 0.3 per cent.
Shares of companies that supply components to Apple rose in Hong Kong, on the back of the technology giant’s better-than-expected first-quarter results and positive commentary on China sales.
Apple on Tuesday posted earnings of US$2.46 per share, higher than the market forecast of US$2.37, according to a Bloomberg poll of analysts. Shares of Apple surged 5 per cent on Wednesday in New York trading.
Chief executive Tim Cook said in a post-earnings call the decline in iPhone sales in China had become “significantly smaller” towards the end of the quarter, which is “an encouraging trend”.
Shares of AAC Technologies, which supplies miniature components such as microphones and speakers to smartphones, rose by as much as 3 per cent. Cowell E Holdings, a supplier of camera modules, advanced by as much as 6.2 per cent while Sunny Optical also added 1 per cent.
Beverage producers rose, led by China Mengniu Dairy, which jumped 5.3 per cent to a record HK$30.55, as investors cheered the newly appointed chairman in the hope that he would bring positive changes to China’s second-largest diary producer by market capitalisation.
Chen Lang, a 53-year-old food industry veteran currently working for the state agricultural conglomerate Cofco, will succeed incumbent Yu Xubo to become the chairman of Mengniu, the company said in a stock exchange filing. Cofco is the largest shareholder of Mengniu.
Chen has extensive knowledge about China’s domestic consumer market and is likely to push forward the company’s shift towards higher-end products, a Citi report published on Thursday said.
Mengniu is likely to have outperformed the industry with double-digit sales growth in the first quarter, based on the first-quarter earnings of its bigger rival Inner Mongolia Yili Industrial Group, analysts led by Rena Ma at ICBC International Research wrote last week.
Carmakers bucked the rising market, and declined after Morgan Stanley cut the industry’s revenue forecast.
Shares of Guangzhou Auto, which makes cars with Toyota Motor and Honda Motors, fell 1.5 per cent. Dongfeng Motors, the Chinese partner of Nissan Motor, dropped 2.9 per cent after Morgan Stanley cut its recommendation to “equal weight” from “overweight”.
