Hong Kong and mainland stocks gain for third day amid optimism about economic recovery in China
- Hang Seng Index adds 0.4 per cent, or 92.48 points, while the Shanghai Composite gains 0.3 per cent
- China’s onshore yuan, Hong Kong dollar appreciate against US dollar
Hong Kong and China stocks rose for a third day on Tuesday, on evidence that a recovery from the ravages of the coronavirus pandemic was strengthening in Asia’s largest economy.
The Hang Seng Index added 0.4 per cent, or 92.48 points, to 24,732.76 at the close. On the mainland, the Shanghai Composite Index gained 0.5 per cent to 3,295.68. China’s onshore yuan, meanwhile, strengthened 0.4 per cent to 6.7827 against the US dollar, its strongest level since May 2019.
The Hong Kong dollar appreciated as well, rising to 7.7500 per US dollar, the top end of its trading band of between 7.7500 and 7.8500. This will require the Hong Kong Monetary Authority – the city’s de facto central bank – to step in and weaken the local currency and bring its exchange rate back within the trading band.
China’s industrial output, retail sales and fixed-asset investments all exceeded economists’ estimates in August, according to National Bureau of Statistics data released on Tuesday morning. The most encouraging part of the data concerned retail sales, which last month returned to growth for the first time this year with a 0.5 per cent year-on-year increase. This was viewed by some traders as signalling a broad-based recovery from the dislocation caused by Covid-19.
“This data is about as strong a signal as one could expect and will continue to support steady economic growth recovery,” said Stephen Innes, strategist at AxiCorp. “Hence the small pop in risk assets across the board.”
Property developers led the gains in Hong Kong, while catering and hotel operators jumped on the mainland on the improvement in retail sales. Chinese airlines also rose on expectations that a stronger yuan will bolster profits by reducing the repatriated value of foreign debt denominated in the US dollar.
In Hong Kong, Wharf Real Estate Investment climbed 5 per cent to HK$32.75 and Country Garden gained 2.5 per cent to HK$9.90. BTG Hotels Group gained 6.7 per cent to 19.97 yuan in Shanghai and China Quanjude Group, the operator of roasted Peking duck restaurants, added 3.2 per cent to 11.38 in Shenzhen.
Air China surged by 6.6 per cent to 7.96 yuan in Shanghai and Juneyao Airlines jumped 5.7 per cent to 12.21 yuan. Air China’s Hong Kong-traded shares added 3 per cent to HK$5.89.
Xiaomi, China’s biggest smartphone maker, slumped 5.1 per cent to HK$22.35, making it the worst performer on the Hang Seng Index. Vice-chairman Lin Bin sold a total of 350 million Xiaomi shares through four blocks in direct off-exchange trade.
On the mainland, Shanghai YanPu Metal Products, a maker of car parts, jumped 44 per cent from its offer price to 33.57 yuan on its trading debut on the Shanghai bourse. The 44 per cent gain is the maximum allowed for debutants on the main boards of mainland exchanges.
Other markets in the Asia-Pacific region were mixed, with Japan’s benchmark falling and equity gauges from South Korea to Taiwan rising. Sentiment swayed between optimism about a vaccine for the coronavirus and angst about increased volatility amid high-flying valuations of US technology stocks.
