Hong Kong reverses into decline as banks retreat a second day

Hang Seng Index falls 0.1 per cent to 27.953.16, paring this week’s gain to 0.4 per cent.

PUBLISHED : Friday, 01 September, 2017, 9:12am
UPDATED : Friday, 01 September, 2017, 10:17pm

Hong Kong reversed into modest declines on Friday as banks retreated for a second day, while mainland stocks gained after a private survey showed that China’s manufacturing activity expanded at the fastest pace in six months in August.

Hong Kong’s Hang Seng Index fell 0.1 per cent, or 17.14 points, to 27.953.16, paring this week’s gain to 0.4 per cent. The Hang Seng China Enterprises Index, or the H-share gauge, also edged down 0.1 per cent.

Banks led decliners for a second day. Industrial & Commercial Bank of China slid 1.0 per cent to HK$5.8, China Construction Bank fell 0.7 per cent to HK$6.81 and HSBC eased 0.1 per cent to HK$75.9.

Internet giant Tencent Holdings snapped two-day gains, dropping 0.9 per cent to HK$326.20.

China SCE Property Holdings dived 4.3 per cent to HK$3.83 after the developer said it will place 400 million existing shares, or 12 per cent of the existing issued share capital, at a price of HK$3.64. It will also issue 400 million new shares at a price of HK$3.64.

“The Hang Seng Index is consolidating around the 28,000 level,” said Kingston Lin King-ham, a director at AMTD securities brokerage. “US and China fundamentals still point to more inflows so the benchmark index may later test 28,588.”

The Hang Seng Index is consolidating around the 28,000 level
Kingston Lin King-ham, AMTD securities brokerage

The state-run Xinhua News Agency said on Thursday night that the Communist Party will convene its key five-yearly congress in Beijing on October 18. The announcement of the meeting date suggests the party has largely reached consensus over the line up to key leadership positions, with Xi Jinping expected to be re-elected as party general secretary and continuing with current financial reforms.

China’s yuan strengthened to the strongest level against the greenback in 14 months, easing capital outflow concerns from the country.

Optimism in the economy was also boosted after data showed Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) rose to 51.6 in August, compared with 51.1 in July and beating economists’ expectations for a slight dip to 50.9 in a Reuters survey.

Macau gaming stocks climbed in Hong Kong trading after JPMorgan raised its recommendations on Sands China and SJM Holdings, citing the risk-reward as attractive due to mass market recovery, improving infrastructure and potential policy support.

Sands China rose 4.1 per cent to HK$36.5 while SJM rallied 4.3 per cent to HK$7.12. Galaxy Entertainment added 3.9 per cent to HK$51.00.

Mengniu Dairy, China’s second largest dairy producer, climbed 6.6 per cent to HK$19.48, its highest level since June 2015.

Mainland’s Shanghai Composite Index gained 0.2 per cent on Friday, or 6.45 point, to 3,367.12. It has an advance of 1.1 per cent this week, for a third straight weekly gain. The CSI 300 Index of large-cap shares added 0.2 per cent on Friday

GD Power Development jumped 10 per cent to 3.84 yuan, as the company resumed trading on Friday after being suspended for the past three months.

A merger of the parent companies of Shenhua and GD Power was approved, China’s regulator of state-owned assets said early in the week, creating the world’s largest power producer in terms of installed capacity.

Steelmakers advanced after steel rebar futures rose to an almost five-year high in Shanghai on Friday. Shandong Iron and Steel soared 6.9 per cent to 2.64 yuan and Nanjing Iron and Steel gained 6.7 per cent to 6.41 yuan.