Hong Kong Stock Exchange

Hong Kong stocks gain ground as Tencent hits all-time high, insurers rally

Tencent jumps 2.3 per cent after 3Q earnings top analysts’ projections; Ping An lead gains among insurers on industry deregulation

PUBLISHED : Thursday, 16 November, 2017, 9:13am
UPDATED : Thursday, 16 November, 2017, 5:20pm

Hong Kong stocks rose for the first time in three days after Tencent Holdings reported earnings that exceeded analysts’ estimates, and insurers including Ping An resumed rallies.

The Hang Seng Index gained 0.6 per cent, or 167.07 points, to 29,018.76 at Thursday’s close, rebounding from a 1 per cent loss a day earlier which was its steepest decline in almost four weeks. The Hang Seng China Enterprises Index, known as the H-share gauge, advanced 1.1 per cent. Mainland bonds and benchmarks of big-cap shares climbed after the central bank pumped money into the financial system in the biggest net injection in 10 month.

People started buying as the benchmark approached key support at the 28,800 level and given Tencent’s strong results
Kenny Wen-kit, Sun Hung Kai Financial

Trading volumes on the Hong Kong exchange were a fifth below the 30-day average today, according to data compiled by Bloomberg. The Hang Seng Index is now down 0.6 per cent after rising to an almost decade high of 29,182.18 on Monday, as turmoil in the mainland’s bonds and equities arising from liquidity concerns hurt sentiment.

“People started buying as the benchmark approached key support at the 28,800 level and given Tencent’s strong results,” said Kenny Wen-kit, wealth management strategist at Sun Hung Kai Financial. “But we still need to watch out for consolidation of the US and A-share markets.”

Tencent jumped 2.3 per cent to an all-time high of HK$391.80 after announcing impressive results. After the market closed on Wednesday, the Chinese internet giant said third-quarter profit increased 61 per cent from a year ago to 18 billion yuan (US$2.7 billion). That surpassed the 15.8 billion yuan estimated by analysts in a Bloomberg poll.

Yixin Group, China’s biggest online car retailer backed by Tencent and, rallied 5.5 per cent from its initial public offering price to HK$8.12 on its first day trading.

Insurers continued to see solid gains after China’s decision last week to allow foreign companies to take controlling stakes in domestic financial joint ventures. Ping An Insurance Group closed 5.6 per cent higher at a record HK$77.85, China Life Insurance rose 2.5 per cent to HK$26.90 and AIA Group added 1.1 per cent to HK$65.30.

Wharf Holdings slid 2.2 per cent to HK$26.90, taking its losses so far this week to 7.8 per cent, after its decision to spin off and list its Hong Kong investment properties. Before the price adjustment from the business split, Wharf closed at HK$73 per share yesterday.

Hong Kong stocks will probably extend the rally that started in February last year as valuations are among the lowest globally, according to Xun Yugen, a strategist at Haitong Securities. The Hang Seng Index is valued at 13.2 times estimated earnings for this year, the cheapest among the major global benchmarks tracked by Bloomberg.

In the mainland, the CSI 300 Index of large companies advanced 0.8 per cent on Thursday and the SSE 50 Index of the top 50 stocks on the Shanghai bourse gained 1 per cent. The Shanghai Composite Index slipped 0.1 per cent after swinging between gains and losses for most of the day.

The 10-year government bond rose for a second day, with the yield falling 2.7 basis points to 3.93 per cent, amid temporary relief from heightened concerns about strained liquidity. The People’s Bank of China pumped in a net 310 billion yuan of funds via reverse-repurchase agreements in its open market operations earlier in the day, the biggest one-day injection since January.

Consumer-staples and pharmaceutical stocks were the best performers among the mainland industry groups today with gains of at least 1.7 per cent. Among them, liquor giant Kweichow Moutai jumped 4.5 per cent to a record high of 719.11 yuan and traditional Chinese medical firm Yunnan Baiyao Group added 3 per cent to 102.71 yuan.