Hong Kong stocks cap off week with 4pc jump, logging longest winning streak in four months

Tencent’s quarterly earnings and Chinese Vice-Premier Liu He’s US visit in investor focus next week

PUBLISHED : Friday, 11 May, 2018, 9:25am
UPDATED : Friday, 11 May, 2018, 11:15pm

Hong Kong stocks closed higher on Friday for a fifth straight session, posting the longest winning streak since January and capping off the week with a 4 per cent jump, tracking strong gains on Wall Street as soft US inflation data eased fears about a faster pace of interest rate rises.

The Hang Seng Index advanced 1 per cent, or 312.84 points, to end at 31,122.06. For the week, it rose 4 per cent, or 1,195 points, marking the steepest weekly percentage gain since February.

The five-day winning streak also marked the longest since January, when the benchmark index rose for seven straight sessions, between January 16 to January 24, according to Bloomberg data.

The Hang Seng China Enterprises Index, which tracks Hong Kong-listed Chinese companies, added 0.9 per cent, or 1 11.34 points, on Friday to end at 12,345.30. It recorded a weekly rise of 3.8 per cent.

“Hong Kong stocks have rebounded in the past week, mainly supported by US and Chinese markets,” said Ben Kwong, executive director and head of research at KGI Asia.

The US market closed sharply higher on Thursday, as softer-than-expected inflation data eased investor concerns for aggressive interest rate increases by the Federal Reserve.

The Dow Jones Industrial Average rose for a six day in a row, logging the longest stretch of increases since February.

The A-share market has also been propped up by expectations that MSCI’s inclusion of A shares in its global benchmarks on June 1 will spark significant fund inflows to the China market.

“But the low turnover level [in Hong Kong] indicates many investors are still hesitant to enter the market,” Kwong added.

For the past week, average daily turnover for Hong Kong’s main board decreased to HK$95.2 billion (US$12.13 billion), down 4.3 per cent from last week.

Investors will closely watch Tencent’s earnings release next week and whether Chinese Vice-Premier Liu He’s US visit could ease trade tensions between the two countries
Ben Kwong, executive director and head of research at KGI Asia

Kwong said weighing on market sentiment were a stronger US dollar and rising US treasury yields, which have weakened the Hong Kong dollar and sparked concerns for faster-than-expected capital outflows from Hong Kong.

“Investors will closely watch Tencent’s earnings release next week and whether Chinese Vice-Premier Liu He’s US visit could ease trade tensions between the two countries.”

In Hong Kong, index heavyweight Tencent Holdings was again the driver behind the Hang Seng Index’s gains, up a combined 6.8 per cent for the week, as investors chased the stock amid expectations the internet giant will post solid quarterly earnings growth next Wednesday.

The stock closed Friday higher by 0.6 per cent at HK$408.8.

“Short-covering losses were triggered when Tencent hit the HK$405 level,” said Steven Leung, executive director at UOB Kay Hian (Hong Kong).

Goldman Sachs analysts have predicted Tencent to post 48 per cent and 43 per cent increases, respectively, in revenues and profit for the first quarter, driven by growth in online gaming business. The investment bank also raised valuations of Tencent’s online-only banking unit WeBank and streaming service Tencent Music, separately, to US$60.5 billion and US$19.5 billion.

Among other market movers, smartphone component maker Sunny Optical Technology climbed 8.2 per cent for the week to close at HK$142.30, and rival AAC Technologies gained a combined 9.3 per cent to HK$121.70.

Geely Auto logged a weekly gain of 12.7 per cent to HK$23.55.

In mainland trading, the Shanghai Composite Index ended lower on Friday, down 0.4 per cent to 3,163.26. Still, the index rose 2.3 per cent for the past five sessions, up for a third straight week.

The start-up board index ChiNext fell 1.6 per cent to close at 1,834.78, but also posted a weekly gain of 1.1 per cent.

Software developers were weak on Friday. Shenzhen Kingsun Science and Technology tumbled 6.9 per cent to 13.20 yuan. Hunan Copote Science and Technology slid 6.4 per cent to 18.01 yuan. HengFeng Information Technology lost 6.1 per cent to 26.97 yuan.