Hong Kong stocks close higher for fifth straight day, marking best weekly advance in a year
Hang Seng Index closed higher on Friday driven by Chinese banks and insurers
Hong Kong stocks closed higher for the fifth consecutive day after swinging between gains and losses in the morning, marking the best weekly advance in over a year, driven mainly by Chinese banks and insurers as worries over tightening monetary policies in China and the US eased.
The Hang Seng Index rose 0.16 per cent, or 43.06 points, to 26,389.23 on Friday. Throughout the week, the local benchmark gained for five consecutive days, amounting to a weekly gain of 4.1 per cent, or 1,048 points, the best since July 2015.
The Hang Seng China Enterprises index rose 0.47 per cent, or 50.63 points, to 10,728.07.
Hong Kong’s Securities and Futures Commission on Thursday pledged that it would step out from “behind the scenes” and use its existing legal powers to regulate listed companies more directly and proactively, a move that may lead to rejections of listing applications or delistings of certain companies with financial problems.
Kenny Wen, a wealth management strategist at Sun Hung Kai Financial, said such a move may divert money into bigger companies from smaller ones, bolstering the Hang Seng Index in the coming weeks.
“The overall market sentiment continues to be stable, so the planned policy by the SFC could mean southbound flows and Hong Kong investors will buy bigger companies instead of smaller ones,” Wen said.
Chinese internet giant Tencent pared earlier losses, inching up 0.14 per cent to HK$284.80, below the record HK$288.40 that was reached last month.
Chinese financials also slipped in the morning but rebounded in the afternoon, with China Construction Bank rising by 0.156 per cent to HK$6.4. Industrial Commercial Bank of China erased earlier losses and inched up 0.19 per cent at HK$5.27.
Ben Kwong Man-bun, head of research and executive director at KGI, said: “The market remains very buoyant just following the trend of the overseas market. But the upside seems to be relatively limited because we already have gains for five days in a row.”
Kwong added that there is consolidation pressure and he expects to see a correction next week.
Gainers on Friday included Chinese property stocks, Chinese financials and some of the resources stocks. “[The winners] are quite diverse and they will remain on a rotational buying pattern,” he said.
Kenny Tang Sing-hing, chief executive of Jun Yang Securities, said many companies have released positive earning forecasts which helped boost market sentiment.
He projects the local benchmark will trade in the range of between 26,500 and 26,800 next week.
“Mainland financial stocks are still likely to be leading market growth next week,” Tang said.
On the mainland, the Shanghai Composite Index rose 0.132 per cent, or 4.26 points, to 3,222.42. The CSI 300 — which tracks the large caps listed in Shanghai and Shenzhen — rose 0.4 per cent, or 16.17 points, to 3,703.09.
The Shenzhen Composite Index lost 0.4 per cent, or 7.69 points, to 1,881.01 while the Nasdaq-style ChiNext shed 1.871 per cent or 33.29 points to 1,745.57.
The People’s Bank of China resumed its open market operations earlier this week after suspending them for more than a week, easing fears of an overly tight monetary policy.
Dovish comments on Thursday from the US Federal Reserve Chair Janet Yellen also boosted market sentiment.
Yellen said it would be “quite challenging” for US growth to reach a 3 per cent target set by President Donald Trump.
On Thursday night, Wall Street posted slight gains. The Dow Jones Industrial Average hit another record high close, with financials rising ahead of profit reports due Friday from several big US banks.
The Dow was up 0.1 per cent to close at 21,553.09, the S&P 500 tacked on 0.2 per cent to 2,447.83, and the Nasdaq Composite rose slightly by 0.2 per cent at 6,274.44.