Hong Kong Stock Exchange

Hong Kong stocks see biggest daily surge in a month, though trading remains light

Chinese banks, car makers and energy companies lead Wednesday’s gains

PUBLISHED : Wednesday, 28 December, 2016, 9:12am
UPDATED : Wednesday, 28 December, 2016, 10:57pm

Hong Kong stocks saw the biggest daily surge in over a month on Wednesday, rebounding from a more than five-month low on the first trading day after the Christmas holiday.

The Hang Seng Index narrowed its gains in late trading, up 0.83 per cent or 179.98 points to close at 21,754.74 after surging more than 1 per cent in the afternoon, while the Hang Seng China Enterprises Index jumped 1.29 per cent or 118.88 points to close at 9,300.63.

However, the trading volume was still low, with the turnover for Hong Kong’s main board shrinking to HK$ 51.5 billion, lower than the average of HK$ 70 billion early this month.

“I do not think Wednesday’s rebound can sustain when the trading volume remains so low,” said Victor Au, Delta Asia Securities’ chief operating officer. “The surge was not representative, especially when it appears ahead of the final settlement day of Hang Seng Index Futures and Options.”

Chinese banks outperformed on Wednesday. The most heavily traded share, China Construction Bank, led the gains among 50 HSI components and surged the most in 10 months, up 4.8 per cent to HK$5.89. ICBC, the world largest bank by assets, jumped 1.11 per cent to HK$4.54.

Tencent, China’s second largest technology giant, advanced 2.17 per cent to HK$183.6 while AAC Technologies Holdings, a supplier of acoustic components and haptics technology, was up 3.41 per cent to HK$69.75.

Auto makers were among the biggest winners, as China considers relaxing the limit on car loans.

Geely Automobile Holdings jumped 4.09 per cent to HK$7.38 while China Meidong Auto Holdings added 2.8 per cent to HK$1.1.

Energy shares also gained as crude oil continued to advance amid rising expectations that the major producers will cut production.

China Petroleum & Chemical Corporation shares gained 0.18 per cent to HK$5.49, while PetroChina and CNOOC shares rose 0.52 per cent and 1.36 per cent respectively.

The Hong Kong stock market was still sounding out the bottom, while daily trading turnover has fallen below HK$60 billion for five consecutive days as both short sellers and buyers leave the market, Linus Yip Sheung-chi, First Shanghai Securities chief strategist, wrote in a research note.

The situation won’t change until the end of the New Year holidays and the benchmark may move within the range of 21,400 to 22,000, Yip said.

The biggest losers included Li & Fung, the world’s top supplier of clothes and toys to retailers, which fell 2.01 per cent to HK$3.42, followed by Cheung Kong Property Holdings, down 0.63 per cent to HK$47.1,

Macau casino operators Sands China and Wynn Macau also underperformed on Wednesday, falling 0.15 per cent and 0.98 per cent, respectively.

In the mainland, the Shanghai Composite Index closed Wednesday 0.4 per cent or 12.42 points down at 3,102.24, while the CSI 300, which tracks large companies in Shanghai and Shenzhen, fell 0.44 per cent to 3,301.89.

The Shenzhen Component Index ended 0.42 per cent or 43.41 points lower at 10,187.16 and the Nasdaq-like ChiNext dropped 0.58 per cent to 1,957.15.

Financial stocks dragged the benchmarks down. China Merchants Bank fell 0.51 per cent to 17.62 yuan with China Citic Bank falling 1.56 per cent to 6.33 yuan.

Stocks related to public private partnership (PPP) projects continued to rally. Long Yuan Construction Group shares surged 4.13 per cent to 11.84 yuan in Shanghai after rising 9.96 per cent to its daily limit on Tuesday. Shanghai-listed Longjian Road & Bridge Co jumped 2.52 per cent to 7.31 yuan.

Overnight on Tuesday, major US indices all inched higher in the wake of the Christmas holidays. The Dow Jones Industrial Average Index closed 0.06 per cent or 11.23 points up to 19,945.04, approaching the 20,000 threshold again. Nasdaq surged 0.45 per cent to 5,487.44, its historic high despite low turnover, thanks to the 6.87 per cent rally in shares of semiconductor company Nvidia Corporation.

The S&P 500 Index gained 0.22 per cent to 2,268.88.

The rally was fuelled by better than expected economic data in the country.

The S&P/Case Shiller index for October, the home price index that tracks 20 major cities in the US , rose 5.6 per cent year on year, up from 5.4 per cent in September. Meanwhile, the Consumer Confidence Index for December surged to 113.7, the highest level since August 2001.