China, Hong Kong stocks extend gains, with wireless earbuds makers benefitting from Apple AirPods’ popularity

Hong Kong stocks climbed at a fresh three-month high while China shares rose to the best level in three weeks on Tuesday, as renewed optimism over a partial US-China ceasefire trade deal lifted the market.

The Hang Seng Index gained 0.5 per cent to close at 27,683.4, its highest level since July 31.

In China, the Shanghai Composite Index closed ahead 0.5 per cent, losing some of its earlier ground when it breached the 3,000 mark for the first time since October 16, but still finishing at the highest level since October 14.

Traders’ hopes for an initial resolution to the US-China trade war were higher following reports that the US and Chinese officials are considering pulling back some tariffs to secure the partial trade deal under negotiation, The Wall Street Journal and the Financial Times reported, citing anonymous sources.

“I think most of the growth is caused by positive expectations in the trade deal because the market expects there is some progress in the negotiations the US and China,” said Kenny Tang, chief executive of Royston Securities.

“The US market is doing very well, which is also one of the incentives for the Hong Kong stock market. And the MSCI is going to further include A shares in November, so investors would expect more opportunities in the mainland Chinese market,” Tang said.

MSCI has been increasing the weight of China’s A shares in the MSCI indexes from 5 per cent to 15 per cent since May, and will further increase the weight to 20 per cent from November 27.

In China, electronics stocks were the market’s favourite as Apple’s wireless earphone AirPods has become a big hit globally.

Luxshare Precision Industry, the main assembler of AirPods – the company’s second fastest-selling new product of all time – rose 5.9 per cent to a fresh record of 34.76. The stock has returned a jaw-dropping 222 per cent so far this year.

Investors are betting on a boom in the so-called True Wireless Stereo (TWS) bluetooth earbuds, led by the popularity of AirPods. Apple has recently launched AirPods Pro, a higher-end version, which costs US$249.

A gauge tracking 24 companies related to TWS earbuds surged 3.1 per cent.

Cosonic Intelligent Technologies, which develops bluetooth earbuds, jumped by the 10 per cent daily limit to 57.32 yuan.

Online gaming stocks in China declined broadly, bucking the overall upward market, after the country moved to tighten up restrictions for players who are minors.

The General Administration of Press and Publication has published a notice that bars online game operators from offering services to minors from 10pm to 8am each day, the official Xinhua News Agency reported on Tuesday.

A gauge of 71 China-listed online gaming stocks dropped 0.2 per cent. Meisheng Cultural, which owns a variety of games and other entertainment operations dropped 3.1 per cent to 7.18 yuan.

In Hong Kong, Chinese internet giant Tencent Holdings was not affected. It contributed the most to the Hang Seng benchmark’s advance, jumping 1.7 per cent to close at HK$333.

Additional reporting by Snow Xia