China, HK stocks get boost after mainland PMI tops estimates, Fed pauses on rates, trade talks get under way

01-Feb-2019 Intellasia | South China Morning Post | 6:00 AM Print This Post

Hong Kong’s Hang Seng Index advanced Thursday morning and briefly topped the 28,000 mark for the first time in four months, after the US Federal Reserve kept rates steady, an official gauge of China’s manufacturing activity came in better than expected, and US-China trade talks got under way.

The Hang Seng Index was up 1.2 per cent, at 27,977.33 by the mid-session close. It briefly touched 28,010.90the first time it rose above the 28,000 mark since September 26.

The benchmark has risen more than 8 per cent so far this year, after a wretched performance in 2018.

Tencent, the most heavily weighted stock on the index, pulled higher, up 1.2 per cent at HK$348.20. The Chinese internet firm has soared 11 per cent in the past month.

Sunny Optical Technology, a smartphone component manufacturer, surged 3.7 per cent to HK$77.40. AAC Technologies, which supplies acoustic components to Apple, also added 1 per cent to HK$48.40.

The Hang Seng China Enterprises Index, known as the H-shares index, gained 1.5 per cent to 11,059.14.

Property developers also rose after the Fed showed a cautious approach towards future rate increases on Wednesday Washington time. Hang Lung Properties gained 1.1 per cent to HK$17.02. Swire Properties advanced 1.7 per cent to HK$30.25.

“The US Fed’s decision was expected by the market,” the Hong Kong Monetary Authority, the city’s de facto central bank, said in a statement. “We note that the Fed is adjusting their views on the pace of interest rate increase and progress of balance sheet reduction. We believe the Fed would continue to take into account factors such as US inflation and economic situation in determining its policy rate level.”

Meanwhile, trade talks between US and Chinese officials began overnight. The trade war continues to weigh on market sentiment.

On the mainland, the Shanghai Composite Index gained 0.6 per cent to 2,591.84 by the noon break.

Earlier in the day, government statistics showed the country’s manufacturing Purchasing managers’ Index (PMI) for January was 49.5, slightly better than December’s 49.4 and higher than a previous forecast of 49.3 in a Reuters survey of analysts.

But it was the second month the figure stayed below the 50-mark that separates expansion from contraction in the sector.

Among other indexes, the large-cap CSI300 rose 1 per cent to 3,200.64. The Shenzhen Component Index and the start-up board index ChiNext gained 0.5 per cent and 0.3 per cent respectively at 7,503.71 and 1,234.22.

Overnight on Wall Street, the US major indexes all advanced, after the Federal Reserve stayed put on interest rates at the conclusion of its first policy meeting in 2019 and indicated a dovish stance towards future rate rises, while earnings from Apple and Boeing topped market estimates.

The Dow Jones Industrial Average rose 1.8 per cent to 25,014.86. The S&P 500 rose 1.6 per cent to 2,681.05. The Nasdaq Composite Index gained 2.2 per cent to 7,183.08.

Elsewhere in Asia, Japan’s Nikkei 225 rose 1.2 per cent to 20,810.71 in Wednesday’s early afternoon trading. Australia’s S&P/ASX 200 and South Korea’s Kospi added 0.1 per cent and 0.3 per cent respectively at 5,890.60 and 2,212.22.


Category: Hong Kong

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