Hang Seng Index briefly tops 28,000 before taking a hit from casino stocks

Sands China and Galaxy fall as Deutsche Bank lowers its projection for Macau’s August gaming revenue growth because of Typhoon Hato

PUBLISHED : Monday, 28 August, 2017, 9:11am
UPDATED : Monday, 28 August, 2017, 11:04pm

Hong Kong stocks rose for a fifth day, with the benchmark index briefly topping 28,000 for the first time since 2015 before those gains were all but wiped out by declines in casino companies.

The Hang Seng Index added 0.1 per cent, or 15.13 points, to finish Monday at 27,863.29, almost giving up an intraday gain of 0.8 per cent that sent the gauge above 28,000 in the morning session. The Hang Seng China Enterprises Index, known as the H-share gauge, gained 0.5 per cent.

The mainland’s Shanghai Composite Index rose to a near 20-month high as brokerages rallied after a state-backed fund bough into the sector in the quarter.

“There’s some profit taking for Hong Kong stocks and that should be purely technical,” said Wei Wei, a trader with Huaxi Securities in Shanghai. “The good momentum is still there and the Hang Seng Index will top 28,000 soon.”

The drag on the index came from Sands China and Galaxy Entertainment Group, which dropped at least 1.3 per cent. Deutsche Bank lowered its projection for Macau’s August gaming revenue growth to between 16 and 18 per cent from between 22 and 24 per cent, citing the impact of Typhoon Hato.

Sands China fell 1.5 per cent to HK$34.10 and Galaxy Entertainment dropped to HK$46.55.

AAC Technologies Holdings, which derives almost half of its revenues from Apple Inc, surged 11 per cent to HK$137 after reporting a 57 per cent jump in profit on Friday to 2.1 billion yuan for the six months ended June 30.

The Shanghai Composite advanced 0.9 per cent, or 31.13 points, to 3,362.65, the highest close since December 31, 2015. The CSI 300 Index of big-cap shares added 1.2 per cent, while the ChiNext gauge of start-ups finished 1.7 per cent higher.

Trading values on the Shanghai and the Shenzhen exchanges totalled 640.5 billion yuan (US$96.5 billion), the highest level in four months, according to data compiled by Bloomberg.

A rally in brokerage stocks ensured the Shanghai Composite’s breakout of a key resistance at 3,300 on Friday, with data from interim reports showing that China Securities Finance, one of the state-backed investors dubbed as the “national team”, bought shares in 11 securities firms for a combined 19 billion yuan. The successful breach would probably lift the mainland’s stock benchmark to 3,600, according to Wei.

“The sentiment is very strong and the broader market will definitely test higher territory,” she said. “The market is following the big money as we see state buying of the brokerage stocks. And also the sector is the market’s laggard, and valuations remain low.”

A gauge tracking the 23 mainland-listed brokerages had fallen 2.4 per cent this year until Friday, according to data compiled by Bloomberg. That compared with a 7.3 per cent gain on the Shanghai Composite. The sector is valued at 2.1 times book values, 18 per cent lower than the seven-year average, the data showed.

Orient Securities surged by the 10 per cent daily limit to 16.78 yuan in Shanghai. China Securities Finance increased its holdings in the brokerage to 57.7 million shares, a 5 per cent stake, in the second quarter, making it the fifth-largest shareholder, Orient Securities said in its first-half report on Monday. Net income for the first six months increased 37 per cent from a year earlier, it said.

Galaxy Securities also jumped 10 per cent to 14.25 yuan and GF Securities climbed 7.1 per cent to 18.80 yuan. China Securities Finance held 21.2 million shares of GF Securities by the end of June as the No 6 shareholder, it said in its interim report over the weekend. First-half profit rose 6.7 per cent, it said.

Wuliangye Yibin, the nation’s second-largest maker of white liquor, added 2.5 per cent to 55.43 yuan in Shenzhen after saying first-half net income had increased 27 per cent from a year earlier.