Unrelenting tech surge spurs Hong Kong’s benchmark higher

Tencent shares post highest close in over two months

PUBLISHED : Wednesday, 06 June, 2018, 5:58pm
UPDATED : Wednesday, 06 June, 2018, 7:55pm

Hong Kong’s stock market rose for a fifth straight session on Wednesday on the back of Nasdaq’s surge to another all-time high and Chinese telecoms company ZTE’s agreement to get the US ban lifted, extending gains in technology shares.

ZTE has signed a preliminary deal that includes a US$1 billion fine plus US$400 million in escrow to cover any future violations, Reuters reported citing unnamed sources. The Commerce Department will lift a ban on buying from US suppliers, allowing China’s No. 2 telecommunications equipment maker to get back into business.

The Hang Seng Index jumped 0.5 per cent or 165.65 points at 31,259.10, while the Hang Seng China Enterprises Index rose 0.2 per cent or 24.26 points to 12,283.58.

Apple-linked stocks rose further. AAC Technologies Holdings, which supplies acoustic components to Apple’s iPhone, leapt 9.3 per cent to HK$131.90, making it the day’s best-performing blue chip. Sunny Optical Technology (Group), which manufactures smartphone camera modules, advanced 4.9 per cent to HK$168.

UBS raised Sunny Optical’s target price to HK$165.5 from $151.5 based on an upgrade of its 2019-20 estimated earnings by 2-5 per cent to reflect its improved product mix and latent contributions from its new vehicle camera module business.

Internet giant Tencent Holdings gained 1.2 per cent to HK$425 – the highest close in over two months.

Yixin Group, which offers car loans and other financial services in China, surged 14.2 per cent to HK$4.27, mobile game services provider Razer climbed 7.7 per cent to HK$2.39, ZhongAn Online P&C Insurance was 3.9 per cent higher and online publisher China Literature added 2.3 per cent to HK$78.

“Good support is forming under the benchmark’s 31,000 level, as investors renew their hopes in the technology sector,” said Stanley Chan, director of research at Emperor Securities.

On Tuesday, the Nasdaq Composite added 31.40 points, or 0.4 per cent, to 7,637.86, to close at a record high for a second day in a row, boosted by gains in Amazon and Apple.

After the market close on Wednesday, Sun Hung Kai Properties announced that from June 29 it would reduce its trading lot size to 500 shares from 1,000 – the first time that the company has reduced it in two decades. The blue-chip developer said the smaller lot would make it more attractive to investors and improve its liquidity. Shares of SHKP have been trading in a tight range between HK$121-131 in recent months. It closed 0.87 per cent higher at HK$127.80.

Hong Kong-listed Chinese financials, however, declined.

Ping An Insurance (Group) slipped 0.2 per cent to HK$79.35. China Construction Bank fell 0.1 per cent to HK$8.14 and Industrial and Commercial Bank of China edged down 0.2 per cent to HK$6.61.

Markets on the mainland were soft. The CSI 300 – which tracks the large caps listed in Shanghai and Shenzhen – lost 0.2 per cent or 7.97 points to 3,837.35, while the Shanghai Composite Index was flat at 3,115.18.

The Nasdaq-style ChiNext slipped 0.2 per cent or 2.86 points to 1,743.25, while the Shenzhen Composite Index tacked on 0.08 per cent or 1.42 points to 1,779.15.

Shares of Chinese companies that make products from battery testing equipment to electrolytes jumped in mainland trading after Tesla said it will build its first car plant outside the US in Shanghai.

Fujian Nebula Electronics, which supplies testing equipment to lithium battery producers, jumped by the 10 per cent daily limit to 29.25 yuan in Shenzhen.

Guangzhou Tinci Materials Technology, an electrolyte producer, surged 6.82 per cent to 43.53 yuan and Shenzhen Senior Technology Material, a maker of coating membrane for lithium batteries, advanced 6.32 per cent to 37.69 yuan.