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Stocks

Tech rebound boosts Hong Kong stocks 1.4pc; Shanghai higher on strong Chinese trade data

Hang Seng ends at 30,402.81, after biggest daily percentage rise in a week. Chinese April exports increase 12.9pc in US dollar terms, while imports rise 21.5pc

PUBLISHED : Tuesday, 08 May, 2018, 10:41am
UPDATED : Tuesday, 08 May, 2018, 10:44pm

Hong Kong stocks rose sharply on Tuesday, as technology shares, led by Tencent Holdings, tracked a strong rebound in US counterparts, while health care companies also attracted buyers as investors predicted MSCI’s upcoming inclusion of Chinese A shares to give a strong boost to selected sectors.

The Hang Seng Index advanced 1.4 per cent, or 408.55 points, to end at 30,402.81 – its biggest daily percentage rise in a week. Forty-seven of the 50 constituent stocks finished higher.

The tech sector posted a strong rally following recent heavy losses, after Apple showed strong momentum on Monday night leading the US market higher.

Tencent, the most heavily weighted constituent stock, jumped 2.8 per cent to HK$390.60, lifting the Hang Seng Index by 74 points. The Chinese internet giant is expected to unveil quarterly results next Wednesday.

Smartphone component manufacturers Sunny Optical Technology and AAC Technologies surged 4.9 per cent and 4.3 per cent, respectively, to HK$141.20 and HK$117.70.

“Apple’s rebound triggered broad gains in Hong Kong,” said Kenny Wen, wealth management strategist at Sun Hung Kai Financial.

“But we still need to wait and see if market sentiment can recover further and push the Hang Seng Index to break out of its current trading range over the coming weeks.”

China International Capital Corp (CICC), one of the country’s largest investment banks, issued a report that expects 229 A shares to be included in MSCI’s global benchmarks next month.

MSCI will add some A shares to the benchmark indexes starting June 1. The initial list of eligible stocks is expected to be revealed on May 15 when the index compiler announces the result of its semi-annual index review.

Apple’s rebound triggered broad gains in Hong Kong. But we still need to wait and see if market sentiment can recover further and push the Hang Seng Index to break out of its current trading range over the coming weeks
Kenny Wen, wealth management strategist at Sun Hung Kai Financial

CICC analysts expect the initial line-up to contain more health care and consumer sector stocks, which have outperformed the overall market since the beginning of this year.

The investment bank also anticipated MSCI to increase the weighting of some Hong Kong-listed Chinese companies in its China indexes, launched recently to prepare global investors for the June 1 inclusion.

Chinese pharmaceutical maker Wuxi Biologics Cayman, one of CICC’s named stocks, soared 6.7 per cent on Tuesday to HK$75.25. China Energy Engineering Corp gained 7 per cent to HK$1.53, while Guotai Junan Securities rose 2.1 per cent to HK$19.08.

Among other market movers, Geely Automobile Holdings climbed 5.3 per cent to HK$22.95, after the Chinese car maker recorded a 49 per cent year-on-year increase in its April sales volume.

The Hang Seng China Enterprises Index, which tracks Hong Kong-listed Chinese companies, gained 1.5 per cent, or 178.38 points, to 12,144.79.

Turnover for the main board increased 8 per cent to HK$103 billion from Monday.

In mainland trading, the Shanghai Composite Index rose 0.8 per cent to close at 3,161.50, as sentiment received a boost after China’s trade statistics for April exceeded market expectations.

Exports increased 12.9 per cent year on year in US dollar terms, while imports also increased 21.5 per cent, the National Bureau of Statistics said earlier in the day.

The large-cap CSI300 gained 1.2 per cent to 3,878.68. The start-up board index ChiNext edged up 0.2 per cent to 1,856.87. Combined turnover for the Shanghai and Shenzhen markets increased 5 per cent to 443.8 billion yuan (US$69.7 billion) from a day ago.

Biotech firm Wuxi AppTec, the first unicorn start-up listing on the A-share market this year, soared by its maximum-allowed, 44 per cent, immediately after the market opened on its first day’s trading, closing at 33.10 yuan.

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