China and HK stocks swing on outlook for trade talks, rates and earnings

31-Jan-2019 Intellasia | South China Morning Post | 6:00 AM Print This Post

Chinese and Hong Kong stocks swung between gains and losses Wednesday as traders sorted through a platter of rapidly approaching market-moving news: the US-China trade talks, a decision on the key US interest rate, and corporate earnings at home.

The Shanghai Composite Index added 0.1 per cent to 2,595.99 in morning trading after falling as much as 0.6 per cent. The Hang Seng Index also gained 0.1 per cent to 27,546.77.

Trading on the mainland’s exchanges was light as the markets will be shut all of next week for the Chinese Lunar New Year holiday. Trading volumes on the Shanghai and Shenzhen exchanges were at least 23 per cent below their 30-day averages, according to Bloomberg data.

Traders will keep close watch on the coming China-US trade negotiation as vice-premier Liu He, President Xi Jinping’s top economic aide, arrived in Washington with a group of senior government officials, including central bank governor Yi Gang. The two days of talks are due to start on Wednesday US time.

Successful talks would remove one of the hangovers that contributed to a 25 per cent slump on the Chinese stock benchmark last year. Investors are also waiting for the outcome of the US Federal Reserve’s policy meeting that concludes on Wednesday US time. The Fed is expected to keep rates unchanged, pausing after rate hikes were blamed in part for turmoil in US stock markets.

Sentiment in the mainland’s stock markets has been downbeat over corporate earnings.

China Life Insurance joined a deluged of companies that delivered disappointing earnings forecasts on Wednesday, saying that profits probably fell as much as 70 per cent last year on decreased investment returns from the equity market. A slew of small-caps tumbled Tuesday after lowering their projections for 2018 earnings.

China Life dropped 1.4 per cent to 22.16 yuan in Shanghai and its Hong Kong-traded stock slid 2.6 per cent to HK$18.76.

Evergrande Health Industry Group jumped 4.5 per cent to HK$14.04. The company’s newly acquired Swedish subsidiary NEVS owner of the Saab car brand has agreed to pay 150 million euros for an undisclosed number of shares in a company that owns Koenigsegg Automotive (KAAB). KAAB is a Sweden-based “supercar” maker whose “ghost sports car” achieved a world-record breaking speed of more than 447 kilometres per hour.

Evergrande will also contribute $150 million towards a 65 per cent stake in a joint venture with KAAB, which will contribute technology, $70 million cash and own the remaining 35 per cent. The venture aims to research, develop and make “the world’s top new energy vehicle”.


Category: Hong Kong

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