All-round positive sentiment boosts Hong Kong, China markets as investors look ahead to trade deal

Hong Kong and China stocks both advanced, lifting the benchmark gauges to the highest level in eight months, as traders snapped up technology companies on optimistic growth outlook.

The Hang Seng Index climbed 1.1 per cent to 28,954.94, finishing at the highest level since May 8. The Shanghai Composite Index rose 0.8 per cent to 3,115.5, its highest level since April 25. The yuan appreciated against the US dollar to the strongest level in five months, as Beijing and Washington are expected to sign a phase one trade deal this week

Traders looked past the US jobs report that delivered mixed signals about the world’s biggest economy to focus on corporate fundamentals. Tencent Holdings topped HK$400 for the first time in 18 months and Alibaba Group Holding rose to a record close for a third straight day. In the mainland, chip makers climbed on anticipation that construction of the 5G network will boost demand and electric car maker BYD surged by the daily limit after China pledged not to slash subsidies for new-energy vehicles significantly.

“With an abundance of liquidity in the system over the Lunar New Year, investors are zeroing in on a positive outlook for 5G which is supporting technology stocks,” said Stephen Innes, a strategist at AxiTrader. “The 5G story is just too big to ignore as it's estimated by 2025 some 600 million Chinese will be 5G-enabled, which will not only transform the domestic scene but will [also] revolutionise the global telecommunication industry. Indeed, investors could ride this wave for a while.”

Taiwan’s Taiex index, which tracks 909 stocks on the island’s exchange, gained 0.7 per cent, to near a three-decade high, after pro-independence President Tsai Ing-wen romped to a landslide victory in the election to secure a second term in office over the weekend.