Hong Kong market welcomes Lam’s ‘Starter Homes’ scheme for first-time buyers

Hong Kong stocks ended the week on an upbeat note, paring the weekly loss to 1 per cent, helped by a broad advance in the city’s real estate developers as investors expected the Hong Kong government to launch a new affordable housing scheme to benefit young, first-time home buyers.

In the mainland, Shanghai shares closed flat, with the airline sector outperforming on the back of strong gains in the yuan.

The Hang Seng Index closed on 27,668.47, up 0.5 per cent, or 145.55 points.

However, for the week, the index still dropped 1 per cent, snapping a three-week winning streak.

Worries about geopolitical tensions prompted investors to largely hold off buying this week, after North Korea conducted its strongest nuclear test explosion.

“Investors are still watching North Korea developments with caution,” said Kenny Tang Sing Hing, vice-chairman and executive director of Jun Yang Securities.

Questions remain over whether it will launch a missile on Saturday to mark its national holiday, given it conducted a detonation on the same holiday last year.

“Risks have increased in the Hong Kong market,” said Linus Yip, chief strategist for First Shanghai Securities.

“Hong Kong stocks have accumulated considerable gains in the past few months. I believe a lot of investors are waiting for the right opportunity to take profit from previous orders.”

He said capital inflows to Hong Kong market may slow, as the US dollar could stage a temporary rebound after hitting its lowest in more than two years recently.

Among other indexes, the Hang Seng China Enterprises Index, known as the H-share index, rose 0.5 per cent, or 50.92 points, to end Friday at 11,149.64. Daily turnover decreased 17 per cent to HK$83 billion from Thursday.

Hong Kong property developers led the way, after Hong Kong chief executive Carrie Lam Cheng Yuet-ngor suggested the government will soon launch the “Starter Homes” scheme to provide subsidised housing to local first home buyers.

Bank of America Merrill Lynch said the scheme will have a positive impact on local property developers, as it may speed up the conversion of farm land owned by developers into residential land.

Sun Hung Kai Properties, Cheung Kong Property, New World Development, and Henderson Land Development gained 4.1 per cent, 3.6 per cent, 5.7 per cent, and 5.8 per cent, respectively. They contributed a combined gain of 63 points to the Hang Seng Index.

However, AAC Technologies and Sunny Optical, both of which supply smartphone components for Apple, fell 1.1 per cent and 2.7 per cent to HK$136 and HK$108, after media reports said Apple’s new iPhone, due to be released next Tuesday, had hit production glitches and could lead to supply shortfalls and shipping delays.

In the mainland, the Shanghai Composite Index ended flat at 3,365.24 on Friday meaning a weekly loss of 0.1 per cent, after three straight weeks of gains.

The CSI 300, which tracks large companies listed in Shenzhen and Shanghai, inched down 0.1 per cent on Friday to 3,825.99. The Nasdaq-style ChiNext Index dropped 0.3 per cent to 1885.27, while the Shenzhen Composite Index rose 0.2 per cent to 1,975.87.

Combined turnover for Shanghai and Shenzhen markets dropped 12 per cent to 553 billion yuan from Thursday.

Airline shares jumped, as investors expected the sector, typically with heavy US dollar debt, to benefit from a stronger yuan.

Shanghai-traded China Southern Airlines rallied 4.5 per cent to 9.06 yuan, Air China advanced 2.5 per cent to 9.32 yuan, and China Eastern Airlines rose 2.2 per cent to 7.08 yuan.

Elsewhere in Asia, Tokyo’s benchmark Nikkei 225 dropped 0.6 per cent to close at 19,274.82. South Korea’s Kospi dipped 0.1 per cent to 2,343.72, and Sydney’s S&P/ASX 200 lost 0.3 per cent to 5,672.6.