Hong Kong stocks extend gains as market sentiment brightens

Hong Kong’s main share index advances 1pc while the H-share index tacks on 0.6pc, boosted by reform of state-owned enterprises and PBOC reserve requirement cut for financial institutions

PUBLISHED : Monday, 11 September, 2017, 9:14am
UPDATED : Monday, 11 September, 2017, 10:43pm

Hong Kong stocks started the week with a broad advance on Monday, extending gains from Friday as market sentiment was lifted by multiple factors including eased geopolitical tensions.

Mainland markets edged up on the back of China’s upcoming timetable to end production and sales of fossil-fuel cars.

The Hang Seng Index closed up 1 per cent, or 286.7 points, at 27,955.13, recovering losses incurred last week. The Hang Seng China Enterprise Index, known as the H-share index, also rose 0.6 per cent to 11,221.13.

Concerns over North Korea were relieved by Pyongyang’s decision to hold a banquet, concert and performances instead of test-firing another missile on Saturday to celebrate national day.

“Although sanctions on North Korea may be rolled out this week, the most dangerous time has already passed, leading to a nice rebound in the market,” said Kingston Lin King-ham, a director at AMTD securities brokerage.

Investors are trying to push up the share prices in companies related to China’s plan to restructure state-owned enterprises and the strengthening of the yuan
Castor Pang Wai-sun, Core Pacific-Yamaichi head of research

Optimism was also prompted by the merger between state-owned construction giant China National Building Material Co and smaller rival Sinoma, which is another case of China’s reform of inefficient state-owned enterprises.

“Investors are trying to push up the share prices in companies related to China’s plan to restructure state-owned enterprises and the strengthening of the yuan,” said Castor Pang Wai-sun, Core Pacific-Yamaichi’s head of research. “Everyone is looking to see if the Hang Seng Index can make a clean break through 28,000.”

The People’s Bank of China will cut the cash reserve requirements for financial institutions settling foreign-exchange forward yuan positions to zero from 20 per cent, sparkling expectations for the loosening of capital controls and boosting market sentiment.

Daily turnover was HK$90 million, up 8 per cent from HK$83 million on Friday.

Index heavyweight Tencent contributed the most to the Hang Seng Index’s advance with a 2.8 per cent jump.

Banks and insurers also gained, led by AIA, which rose 1.5 per cent, and HSBC, which was up 1.3 per cent. Bank of China added 1.2 per cent, and China Construction Bank rose 1 per cent.

Shares related to Apple’s next iPhone, due to be released on Tuesday, were active. AAC Technologies climbed 2.7 per cent to HK$139.6 after UBS raised the target price to HK$158 from HK$145, while Q Technology plunged 14 per cent.

Property developers were up, with Evergrande rising 10.4 per cent to HK$24.90 and Country Garden up 1.8 per cent higher to HK$12.16. Sun Hung Kai Properties gained 1.4 per cent to HK$135.60.

In mainland China, new-energy vehicle and battery shares advanced, as a senior official said on Saturday that China is working on a timetable to ban production and sales of fossil-fuel vehicles.

The Shanghai Composite Index added 0.3 per cent, or 11.18 points, to 3,376.42, while the CSI 300, which tracks large caps listed in Shanghai and Shenzhen, was little changed at 3,825.65.

The Shenzhen Composite Index rose by 0.8 per cent, or 15.86 points, to 1,991.73, while the Nasdaq-style ChiNext increased 0.6 per cent, or 11.11 points, to 1,896.38.

In other Asian markets, Tokyo’s Nikkei 225 gained 1.4 per cent to 19,545.77. The South Korean Kospi rose 0.7 per cent while Sydney’s All Ordinaries increased 0.6 per cent.