Hong Kong stocks rebound, as investors get set for resumption of mainland trade

Hang Seng Index rallies 1.81 per cent, adding 558.26 points to 31,431.89

PUBLISHED : Wednesday, 21 February, 2018, 11:11am
UPDATED : Wednesday, 21 February, 2018, 10:43pm

Hong Kong stocks rebounded on Wednesday, driven by Chinese financials and oil stocks amid expectations of capital inflows when mainland Chinese markets reopen on Thursday after the Lunar New Year holiday.

The Hang Seng Index finished 1.81 per cent higher, adding 558.26 points to 31,431.89. The Hang Seng China Enterprises index, or the H-share gauge, jumped 2.34 per cent or 290.01 points to 12,686.88.

“The market is being pulled in one direction by concerns over interest rate rises while being pulled in the opposite direction by optimism over southbound flows,” said Stanley Chan, director of research at Emperor Securities.

Internet giant Tencent Holdings was the most heavily traded share, gaining 2.74 per cent to HK$458.00. Chinese lens maker Sunny Optical Technology Group increased 0.69 per cent to HK$132.20.

Chinese financials and oil stocks were sharply higher before tomorrow’s reopening of mainland markets after a week-long Lunar New Year holiday.

Industrial & Commercial Bank of China climbed 3.34 per cent to HK$7.11, China Construction Bank was up 2.76 per cent to HK$8.56 and Ping An Insurance gained 1.76 per cent to HK$85.60.

PetroChina advanced 2.77 per cent to HK$5.57, CNOOC added 2.65 per cent to HK$11.64 and Sinopec rose 3.72 per cent to HK$6.42.

Meanwhile Country Garden Holdings, China’s third-largest property firm by contracted sales, was the best-performing blue chip, rising 5.60 per cent to HK$14.34.

Hong Kong Exchanges and Clearing also increased 1.94 per cent to HK$283.20.

HSBC rebounded 0.80 per cent to HK$81.60 after a 3.11 per cent slump on Tuesday after announcing quarterly results.

The lender’s fourth quarter 2017 results showed its pre-tax profit was US$3.58 billion, 8 per cent below the consensus estimate, according to investment bank Jefferies, as the bank’s two large European borrowers ran into difficulties.

For 2017 as a whole, HSBC’s pre-tax profit was US$21 billion, 11 per cent higher than the equivalent figure last year, once both figures were adjusted to remove one-off items.

HSBC also surprised investors by not buying back a further tranche of its own shares because of technical regulatory issues, but investors had absorbed the negative news and were re-focusing on its company fundamentals, Chan said.

The Hang Seng Index has been on a downtrend since it touched a record high of 33,335.48 in late January, amid volatile global markets and rising concerns that potential interest rate hikes by the US Federal Reserve would curb economic growth.

“Investors next week will focus on comments by Federal Reserve Chairman Jerome Powell, while also watching the earnings results of Galaxy Entertainment and Sun Hung Kai Properties,” Chan said.