Source:
https://scmp.com/business/markets/article/3042643/hong-kong-stocks-finish-higher-index-heavyweight-tencent
Business/ Markets

Hong Kong stocks finish higher, with index heavyweight Tencent continuing its roll

  • Tencent closes ahead by 1.7 per cent
  • Mainland traders stay on the sidelines despite injection of liquidity
Investors look at computer screens showing stock information at a brokerage house in Shanghai on May 6, 2019. Photo: Reuters

Hong Kong stocks finished higher Wednesday as investors bought stocks like Tencent with heavy China business exposure. Mainland China indexes, however, snapped a two-day winning streak.

The Hang Seng Index closed 0.2 per cent higher, at 27,884.21. The CSI 300, which tracks blue chips listed on Shanghai and Shenzhen, lost 0.2 per cent to 4,032.78, while the Shanghai Composite Index lost 0.2 per cent to 3,017.04.

Many Hong Kong investors were back on the sidelines, waiting to see what goodies President Xi Jinping might announce for their neighbour Macau as the special administrative region celebrates its 20th anniversary of its handover to China this week.

The market is expecting Xi – who arrived in Macau Wednesday for a three-day visit – will announce the setting up of a yuan stock exchange for the enclave, although not directly threatening the Hong Kong Exchanges and Clearing, which closed 0.4 per cent higher to HK$257.6.

Still, in Hong Kong, traders were holding back big bets on the city’s stocks. The city has been mired in sometimes violent protests for more than six months, and its embattled economy is slated for a 1.3 per cent full year contraction for 2019.

Keeping the index afloat were Tencent, which rose 1.7 per cent to HK$377.6 and CNOOC, which was the top percentage gainer on the Hang Seng, climbing 3.5 per cent to HK$12.48.

Still, Alan Li, portfolio manager at Atta Capital, said he is sticking with his call that the Hang Seng Index will rise to 28,000 by the end of the year.

“The HSI may face a bit resistance before 28,000, but I don’t expect a deep adjustment,” Li said.

He expects investors to prefer index stocks that are laggards, such as Tencent.

China-related stocks dominated blue chip gainers. Industrial and Commercial Bank of China rose 1 per cent to HK$5.93; China Construction Bank rose 0.6 per cent to HK$6.63; and diary product maker Mengniu Dairy rose 1.6 per cent to HK$31.8.

In China, a surprising interest rate cut failed to bolster the market. The People’s Bank of China cut the rate on its 14-day reverse repurchase agreement by five basis points, to 2.65 per cent from 2.7, while it injected a total of 200 billion yuan liquidity into the financial system, in another sign of its easing bias to stimulate the economy.

Health-care stocks dragged down the indexes, as Jiangsu Hengrui Medicine lost 1.5 per cent, to 84.75 yuan, Wuxi Apptech dropped 3.2 per cent to 94.64 yuan, and Joinn Laboratories (China) lost 4.9 per cent to 59.97 yuan.

Index heavyweight Kweichow Moutai lost 0.2 per cent to 1,168 yuan, while China Life dropped 1 per cent to 34.77 yuan.

Chinese equities lost the momentum seen in the previous two days over stronger November industrial output and retail sales figures because they did not provide enough evidence that China’s economic slowdown has bottomed out, according to Xu Lei, an analyst with Shenwan Hongyuan Securities based in Shanghai.

“One would need to observe at least three months of economic performance data to be able to say that the slowdown in China’s growth has turned a corner,” said Xu.

European private bank Pictet Wealth Management said it expects the US-China trade war to continue to weigh on China’s GDP growth in 2020, as it forecasts growth dropping to 5.9 per cent, from 6.2 per cent expected for 2019.

Additional reporting by Deb Price