Hong Kong stocks rise as Tencent, insurers rebound

Hang Seng Index closed 0.22pc up on Monday, while mainland China indices were mixed

PUBLISHED : Monday, 04 December, 2017, 9:19am
UPDATED : Monday, 04 December, 2017, 10:36pm

Hong Kong stocks rose modestly on Monday, led by a rebound in Tencent and insurers, and as the market had absorbed the impact from changes made to the constituent weighting on the Hang Seng Index.

The benchmark index edged up 0.22 per cent, or 64.04 points, to 29,138.28 and the Hang Seng China Enterprises Index added 0.6 per cent, or 68.64 points, to 11,518.07.

“The drops in previous weeks seem irrational,” said head of research at Core Pacific-Yamaichi, Castor Pang.

“It seems the markets have already oversold but pressures seem to have vanished this morning. Ping An and Tencent both rebounded substantially, as did the general market,” Pang said, before cautioning that the overall momentum remains weak.

“Investors have already made substantial profits and they will try to reduce their market exposure before the year end. Most stocks are still trading at quite a low level.”

He expected the Hang Seng Index to fluctuate over the short term, and hit a major resistance around the 29,800 level.

Tencent was the most heavily traded stock, closing up 0.88 per cent to HK$388.40, as investors finished making investment adjustments in response to the Hang Seng Indexes Company’s decision to cut its weighting on the benchmark index.

Last week, shares in Tencent slumped 7.41 per cent in its worst weekly decline in 21 months as investors sold the social network operator ahead of the reduction of its index weighting to 10 per cent from 11.58 per cent, becoming effective on Monday.

Among other changes to the Hang Seng Index, Country Garden and Sunny Optical Technology were newly included as constituent stocks. Country Garden jumped 3.11 per cent to close at HK$13.28 on Monday, while Sunny Optical Technology ended flat at HK$132.00.

Cathay Pacific and Kunlun Energy also traded mixed on Monday after being removed from the index. Cathay dropped 1.52 per cent to HK$11.64, while Kunlun Energy rose 2.94 per cent to HK$7.00.

Among insurers, Ping An rebounded 2.25 per cent to HK$77.20, after posting its largest weekly drop last week since January 2016. China Life gained 0.59 per cent to HK$25.45 and AIA rose 0.63 per cent to HK$63.60.

The transportation sector and car makers also performed well. China Eastern Airlines climbed 3.71 per cent to HK$4.75, China Southern Airlines jumped 3.62 per cent to HK$7.15 and Air China advanced 2.98 per cent to HK$8.64.

Geely Automobile was up 2.18 per cent to HK$28.10, Dongfeng Motor Group was 2.56 per cent higher to HK$10.02 and BAIC Motor added 3.09 per cent to HK$9.69.

Mainland stock indices closed mostly lower on Monday. The Shanghai Composite Index dropped 0.24 per cent, or 8 points, to 3,309.62, while the CSI 300 Index increased 0.52 per cent, or 20.72 points, to 4,018.86.

The Shenzhen Composite Index fell 0.72 per cent, or 13.89 points, to 1,902.91, and the Nasdaq-style ChiNext slipped 0.38 per cent, or 6.85 points, to 1,797.77.

Asian markets were generally mixed on Monday. Tokyo’s Nikkei 225 lost 0.49 per cent at 22,707.16 and the Sydney All Ordinaries fell 0.08 per cent, while South Korea’s Kospi rose 1.06 per cent.