Hong Kong, China markets gain as positive sentiment builds ahead of next week’s trade talks
- All but two of the 25 STAR board high fliers rise
- Tencent-owned China Literature plunges 12 per cent on shareholder stake-cut plan
Hong Kong and China markets advanced for the third straight day, as technology shares continued a rally prompted by positive developments in the US-China trade talks.
The Shanghai Composite Index on Thursday rose 0.5 per cent to 2,937.36. The Shenzhen Component Index surged 0.9 per cent, and the ChiNext Index of start-ups gained 0.8 per cent.
The Hang Seng Index rose 0.3 per cent to 28,594.3. Turnover reached HK$68 billion (US$8.7 billion), lower than the daily average of HK$82 billion achieved in June.
The gains came after China said its trade negotiators will meet with US representatives for the latest round of talks in Shanghai next Tuesday and Wednesday.
The talks will be carried out on the basis of equity and mutual respect, China’s Ministry of Commerce spokesman Gao Feng said during a press conference, confirming the White House’s announcement on Wednesday and media reports earlier this week.
“Investors are speculating on what kind of outcomes the talks will produce,” said Kenny Tang, chief executive at Royston Securities.
Tang, however, said he does not think the meeting will lead to substantial progress in the two countries’ trade dispute.
“The resumed trade negotiation is likely to be a bumpy road, and I don’t believe anything significant can be reached this soon,” he said.
All but two of the 25 stocks listed on the newly launched STAR technology board in Shanghai continued to rise. Suzhou TZTEK Technology, a developer of automated warehouse and logistics systems, led the advance with a 15 per cent gain to 50.5 yuan.
Turnover in the STAR stocks reached 29 billion yuan (US$4.2 billion), up from the 23 billion recorded Wednesday.
Stocks on the new board essentially have no curbs on how much they can rise or fall in their first five days of trading. They then can trade a maximum up or down by 20 per cent in a day. Other China markets have a daily 10 per cent up or down limit.
For now, the high-flying stocks are not available to traders outside of China. But some are expected to eventually be added to the Stock Connect programme.
Electronic component makers listed in Shanghai and Shenzhen surged 2.5 per cent, making them the top-performing sector in the market, according to a gauge compiled by Citic Securities. Eight of the 262 stocks jumping by the 10 per cent daily limit, including copper-clad laminate maker Goldenmax International Technology.
In Hong Kong, China Literature, the country’s largest online publishing website, plummeted by 12 per cent to HK$33.25, following a media report of its big shareholder’s stake cut plan.
Carlyle Group, an early investor in China Literature that owned 4.9 per cent of the company’s shares, offered 28 million shares at HK$35.5 to HK$36 apiece through its investment vehicle Luxun Investment, Bloomberg reported on Wednesday.
Hong Kong property developers also trended lower, as sentiment worsens amid ongoing protests sparked by a controversial extradition bill and also the year-long US-China trade war.
The decline came as the city’s government sold the biggest plot of residential land at the former Kai Tak airport at a discount to valuations Wednesday.
The result shows developers have “turned more cautious on the housing market outlook,” according to a report by Bloomberg Intelligence, adding that residential market sentiment is likely to soften in the short term.
Sun Hung Kai Properties, Hong Kong’s largest developer by market value, dropped 1.4 per cent to HK$128.8. New World Development declined 1.3 per cent to HK$11.9. Wharf Holdings declined 0.7 per cent to HK$20.2.
