Hong Kong stocks end in positive territory, led by telecoms, property

Hong Kong stocks closed higher while mainland shares were marginally down on Wednesday, as investors gauged the impact of a likely interest rate increase at the conclusion of the US Federal Reserve policy board meeting next week.

The Hang Seng Index gained 0.43 per cent, or 101 points, to 23,782, while the Hang Seng China Enterprises Index added 0.49 per cent, or 51 points, to 10,280.

ZTE Corp jumped 5.57 per cent to HK$12.9 after the company agreed to pay a record fine to the US government to settle its violation of trade sanctions. The company also reported strong preliminary earnings for 2016.

Shares of China Unicom closed up 2 per cent at HK$9.6, following reports that the company is being reviewed for the mixed-ownership reform.

Mainland developers got a boost after Chinese Premier Li Keqiang cited the need to cut excessive real estate inventory in smaller mainland cities classified as third and fourth tier.

“Investors are mostly waiting for next week’s Fed rate rise, so there would not be many changes in the two markets,” said Kingston Lin King-ham, director of AMTD Group, referring to Hong Kong and mainland equities.

“But if people are not that optimistic about the situation there is a chance we could see the Hang Seng Index drop below the 23,200 threshold by the end of this week.”

The Fed will conclude its two-day policy board meeting next Wednesday.

Linus Yip, chief strategist at First Shanghai Securities, said although a US interest rate rise next week was almost certain, investors would look to the language of the accompanying policy statement and the press conference for further clues to pace of future interest rate tightening.

On the mainland, the Shanghai Composite Index was down 0.05 per cent to 3,241 while the CSI 300, which tracks large companies listed in Shanghai and Shenzhen, eased 0.2 per cent to 3,449.

The Shenzhen Component Index lost 0.5 per cent to 10,498 while the Nasdaq-like ChiNext shed 0.7 per cent to 1,965, as tech shares retreated after a rally earlier this week.

China reported a trade deficit for February, its first for any month in three years, as imports surged 44.7 per cent, according to government data released in the afternoon.

Yip said the trade data did little to affect trading in either Hong Kong or China on Wednesday. Still, he cautioned that a further widening of the trade deficit could hurt sentiment.

“If the two states adopt protectionist policies, China has to depend on its domestic demand,” he said. “But we need to see whether domestic demand can pick up so fast.”

Shares in the engineering and defense sectors led the gains on mainland bourses. Artificial intelligence-related shares fell following a two-day rise after the government vowed to support innovation.

Shares of Shanghai Originaldow Advanced Compounds, which produces special polymers, jumped by their 44 per cent limit in debut trading in Shanghai , ending at 15.28 yuan, up from an IPO price of 10.61 yuan.

In other Hong Kong trading, China Resources Land extended its winning streak from the previous two sessions, adding 1.7 per cent to HK$21.35.

Carmaker Geely Auto saw its shares rise 8 per cent to HK$11.56. The company replaced Li and Fung to become a constituent stock in the Hang Seng Index on Monday.

MTR Corporation was also among the winners, rising 1.2 per cent to HK$42.1 on news that the company plans to offer seven property projects for tender over the next 12 months.

Elsewhere around the region, Tokyo’s Nikkei 225 lost 0.5 per cent to 19,254, while the Kospi in South Korea was little changed at 2,095. Australia’s S&P/AXS 200 dropped by a marginal 0.03 per cent to 5,760.