Hong Kong stocks extend four-month winning streak, up 12pc this year
In contrast, Shanghai Composite Index caps the worst month of the year on liquidity worries
Hong Kong stocks closed Friday on a downbeat note ahead of the holidays, but still hovered near a two-year closing high, capping the month of April with a 2.1 per cent advance.
So far this year, the city’s stocks have risen for four straight months, up a combined 12 per cent.
Brokers said investors took profits after some strong buying in banking and Chinese companies listed in Hong Kong, buoyed by upbeat corporate earnings and China’s better-than-expected economic growth for the first quarter.
The Hang Seng Index took a pause on Friday from a four-day winning streak and dropped 0.3 per cent, or 83.35 points, to close at 24,615.13. On Thursday, it scored the best finish since July 2015.
For the week, the index advanced 2.4 per cent, extending its monthly gain to 2.1 per cent.
On Friday, the Hang Seng China Enterprises Index, or the H-shares index, fell 0.4 per cent, or 41.36 points, to 10,219.89.
“There was some buying interest in banking stocks and some mainland companies that were reporting better than expected first quarter results. Standard Chartered Bank, HSBC, China Life and AIA were doing well this week. But then some investors started to take profits this morning as they want to unwind their positions ahead of the holidays next week,” said Gordon Tsui, managing director of Hantec Group.
Daily turnover shrank to HK$65 billion as investors were reluctant to take on fresh positions ahead of the holidays. Hong Kong markets will be shut for Labour Day on Monday and Buddha’s birthday on Wednesday.
Equity markets were unmoved by the much vaunted tax plan by US president Donald Trump because it lacked details, said Ben Kwong Man-bun, a director of KGI Asia.
“The market is now focused on corporate earnings as many mainland firms released their first quarter results this week,” he said.
However, mainland Chinese stocks capped the worst month of the year, with a 2.1 per cent monthly loss, as analysts said investors remained jittery about Beijing’s tightening of financial regulations.
The Shanghai Composite Index ended Friday fractionally higher, up 0.1 per cent, or 2.47 points, to 3,154.66. It still dropped 0.6 per cent for the week.
For April, the index posted a 2.1 per cent loss, the worst monthly decline this year.
On the same day, the CSI 300 – which tracks the large caps listed in Shanghai and Shenzhen – edged down 0.2 per cent, or 6.97 points, to 3,439.75.
The Shenzhen Component Index was up 0.1 per cent to 10,234.65, the Shenzhen Composite Index rose 0.4 per cent to 1,906.92, and the Nasdaq-style ChiNext added 0.4 per cent to 1,850.73.
Combined daily turnover for Shanghai and Shenzhen markets decreased sharply by 20 per cent to 416.5 billion yuan from Thursday.
Mainland Chinese markets will also observe the Labour Day holiday on Monday.
“The liquidity issue has haunted markets, as the People’s Bank of China suggested it will continue the prudent monetary policy with a slight tightening bias,” said Fu Chuangui, an analyst for Dongguan Securities.
He added that regulators have recently stressed the policy priority for 2017 is to reduce financial leverage and curb excessive speculation.
Among market movers, China Life briefly rose 0.8 per cent during the intra-day session as the country’s largest insurer in terms of premiums reported a 17 per cent increase in its first quarter net profit. However, it had given up all the gains by close and dropped 0.4 per cent to HK$23.65.
Ping An, the nation’s second-largest insurer, gained as much as 1.5 per cent after posting an 11.4 per cent increase in first-quarter net profit . It closed down 0.5 per cent at HK$43.8.
Hantec’s Tsui believes these financial and banking stocks will bounce back next week after investors are back from the holidays.
“Trump’s tax reform may not be too exciting, but overall his policies will lead to more interest rate rises which is good news for insurance and banking stocks,” Tsui said.
Elsewhere in Asia-Pacific, Tokyo’s Nikkei 225 finished down 0.3 per cent at 19,196.74. Seoul’s Kospi was off 0.2 per cent to close at 2,205.44 and the ASX 200 in Sydney closed up less than 0.1 per cent at 5,924.1.
In early European trading on Friday, Paris’ CAC was up 0.2 per cent and Frankfurt’s DAX inched 0.1 per cent higher.
US markets edged higher overnight, with the Dow Jones Industrial Average rising 0.03 per cent to 20,981.33 while the S&P 500 Index rose 0.06 per cent to 2,388.77. The technology-heavy Nasdaq index rose 0.4 per cent to 6,048.94.