Hong Kong, China shares rebound as US stocks test 20,000 threshold

PUBLISHED : Wednesday, 21 December, 2016, 9:26am
UPDATED : Wednesday, 21 December, 2016, 10:17pm

Hong Kong and mainland Chinese stocks rebounded to end several days of falls, thanks to the strong rally in the United States and a stabilisation of the mainland’s bond market.

The Hang Seng Index closed 0.37 per cent higher at 21,809.8, ending a four-day drop as the financial and energy sectors rose. The benchmark has been stranded below 21,914 — its level at the start of the year — for three days. The Hang Seng China Enterprises Index gained 0.52 per cent to 9,331.63.

“The market is actually quiet ahead of holidays. Turnover is low. But a low daily turnover may lead to higher volatility as it’s easier to push up and drag down the benchmarks,” Sam Chi-yung, senior strategist of South China Research, said.

Daily turnover dropped to HK$47.6 billion from HK$53.8 billion a day earlier, much lower than an average of HK$60 to HK$70 billion last week.

The stock rally in the United States, supported by the strengthening US dollar following the presidential election and the Fed interest rate rise, may give some support to the Hong Kong market, Sam said.

“I am positive on the US market before Donald Trump’s inauguration on January 20. The Dow Jones can notch up 20,000 sooner or later as people are excited about Trump’s policies,” Sam said. “But we may see sell-offs if Trump fails to realise his promises.”

The Dow Jones Industrial Average went up 0.46 per cent on Tuesday overnight to another record high at 19,974.62, just a hair’s breadth from the psychologically important 20,000 threshold.

China Life Insurance Company outperformed its blue-chip peers, closing 2.51 per cent higher at HK$20.4.

Casino players also jumped, amid expectations of increasing revenues for 2017. Sands China advanced 1.99 per cent to HK$33.3, and Galaxy Entertainment added 1.65 per cent to HK$33.9.

Oil companies enjoyed gains as oil prices climbed. PetroChina jumped 1.54 per cent to HK$5.95, while China Petroleum & Chemical added 1.25 per cent.

Hong Kong property developers, however, were lower on concerns that surging mortgage costs will threaten home sales.

The three-month Hong Kong Interbank Offered Rate continued to rise, hitting 1.0096 per cent, the highest in more than seven years on Wednesday. Mortgages issued through Hong Kong banks for local property purchases are tied to the Hibor rate.

Hang Lung Properties dropped 0.97 per cent to HK$16.32, while Cheung Kong Property Holdings fell 0.31 per cent to HK$48.55.

“It [the Hang Seng Index] is just a technical rebound after Hong Kong suffered consecutive declines,” said Victor Au, Delta Asia Securities’ chief operating officer. “But the rising momentum will be weak ahead of the holiday season.”

Over on the mainland, the A-share market saw its biggest one-day gains in more than a month, as the bond market stabilised from sharp falls. The Shanghai Composite Index closed 1.11 per cent or 34.55 points higher at 3,137.43, while the CSI300 Index gained 0.89 per cent to 3,338.54.

The Shenzhen Component Index rose 0.67 per cent to 10,313.57, and the Nasdaq-like ChiNext rose 0.47 per cent to 1,991.7.

China’s bond market rebounded on Wednesday, reversing declines in the previous two trading sessions.

The benchmark 10-year treasury futures for March delivery rebounded 1.57 per cent, while the 5-year Treasury futures for March delivery ended 1.09 per cent higher.