Hong Kong stocks rise a second day as developers and health care firms gain on strong earnings

Health care counters traded in the city surge 9pc and developers are up 4pc and more; Mainland Chinese shares also gain

PUBLISHED : Tuesday, 21 August, 2018, 6:47pm
UPDATED : Tuesday, 21 August, 2018, 6:47pm

Hong Kong stocks rose for a second day on Tuesday as a slew of stronger-than-expected earnings released triggered gains among health care and pharmaceutical firms as well as Chinese property developers.

The Hang Seng Index rose 0.6 per cent, or 154.77 points, to 27,752.79, and the Hang Seng China Enterprises Index was higher by 1 per cent, or 105.27 points, to 10,737.63.

“Corporate results are certainly good in the first half of the year. But what the market really wants to see is whether increasing negative factors will affect the second-half results,” said Linus Yip, chief strategist at First Shanghai Securities.

CSPC Pharmaceutical Group surged 9.9 per cent to HK$19.58, becoming the best-performing blue chip and rising for a second day after it announced on Monday that its first-half net profit grew 41 per cent on the back of a 50-per cent rise in revenue, in line with estimates. Nomura raised the company’s target price to HK$30 while JPMorgan maintained its overweight weighting for the stock with a target set at HK$29.

Wuxi Biologics jumped 9.1 per cent to HK$70.50 as 9.1 million shares changed hands after it announced that its interim net profit grew 1.7 times, beating an earlier profit alert of over 1.5 times.

Country Garden Holdings soared 7.9 per cent to HK$12.24 after reporting core net profit amounted to 12.9 billion yuan (US$1.9 billion) in the first half, up 80 per cent yearly and above estimates, thanks to lower effective tax rate, and sales and administrative expenses.

But what the market really wants to see is whether increasing negative factors will affect the second half results
Linus Yip, First Shanghai Securities

China Resources Land rose 4.4 per cent to HK$28.55 after it posted a first-half net profit growth of 96 per cent from a year earlier and a dividend increase of 30 per cent. Goldman Sachs set the target price for the developer at HK$36.80.

Still, Bank of America Merrill Lynch on Tuesday cut target prices for a handful of mainland developers, even though it said that valuations were starting to appeal after some price adjustments, with Vanke Property (Overseas) and China Overseas Land & Investment being among the most attractive developers. China Overseas Land’s target price was cut to HK$31 from HK$34 while the stock closed up 1.7 per cent to HK$24.10. Vanke’s target price fell to HK$31.50 from HK$38.50 as the stock eased 1.7 per cent to HK$4.70.

Agile Group Holdings – target price cut to HK$16.50 from HK$18.50 – climbed 7.5 per cent to close at HK$12 on Tuesday.

China Telecom also jumped 5 per cent to HK$3.76 after reporting an 8.1-per cent rise in first-half net profit amounting to 13.57 billion yuan (US$1.98 billion) on the year.

Sunny Optical Technology Group advanced 8.8 per cent to HK$94.70. Citigroup projected a sales volume growth of 45 per cent to 50 per cent on expectations that sales of the firm’s handset lenses would outstrip those of its peers. Apple supplier AAC Technologies Holdings also rallied 8.6 per cent to HK$87.20.

In the mainland, the Shanghai Composite Index gained 1.3 per cent, or 35.36 points, to 2,733.83 and the CSI 300 – which tracks the large caps listed in Shanghai and Shenzhen – increased 1.8 per cent, or 59.40 points, to 3,326.65.

The Shenzhen Composite Index was higher by 1.4 per cent, or 20.21 points, to 1,471.28 and the Nasdaq-style ChiNext rose 1.5 per cent, or 21.28 points, to 1,456.97.

In the currency market, onshore yuan continued to stabilise in the mainland, trading at 6.8370 against the US dollar at 5pm on Tuesday, Hong Kong time, as the dollar retreated after US President Donald Trump criticised the Federal Reserve for increasing rates and accused China and Europe of manipulating their currencies.