HK, China stocks steady even as trade talks end without concrete results

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

Hong Kong and mainland markets bounced back to just about hedge earlier losses on Thursday, with traders seeming less than wowed by the results of three days of US-China trade talks. But Citic Securities, Xiaomi, Sunny Optical and green energy stocks defied the trend with big moves.

By midday the Hang Seng Index was up 0.37 per cent, or 103.53 points, to 26,559.85, while the Hang Seng Index rose 0.46 per cent, or 47.61 points, to 10,405.82.

On the mainland, the Shanghai Composite was up 0.23 per cent, or 5.73 points, to 2,550.08, and the CSI 300 of large caps gained 0.37 per cent, or 11.46 points, to 3,089.94.

Overnight in the US, stocks rallied for a fourth straight session, led by energy producers. Investors gained confidence from the December 18-19 Federal Reserve meeting released minutes, which confirmed dovish signals that interest rates could be paused through March, and perhaps beyond, as policymakers wait for clarity on risks to global growth that could impact the US economy.

Signs of thawing tensions between the US and China emerged after trade talks wrapped up on Wednesday.

The US noted a commitment from Beijing to buy more US agricultural goods, energy and manufactured products, while China said the meetings were “extensive, in-depth and detailed”, and laid the groundwork for a resolution. The US-China trade truce ends on March 1.

“The market’s emotions have improved a little bit due to the positive news from the trade negotiations,” said Gordon Tsui, managing director of Hantec Pacific. “But I don’t think it will have a big impact on the market since all the investors expected the negotiations would not get worse, and for the past few day the market has reflected the positive news.”

In China, producer prices for December rose at their slowest rate since September 2016, as factories see a slowdown in demand, according to data published by the National Statistics Bureau on Thursday.

The producer price index (PPI), which measures the prices businesses receive for their goods and services, rose 0.9 per cent from a year earlier, compared to a 2.7 per cent rise in November.

The consumer price index (CPI), meanwhile, gained 1.9 per cent in December from a year earlier, but this was down from a 2.2 per cent rise in November.

Among big movers, Citic Securities was up 6.18 per cent to 17.00 yuan by midday, after resuming trading at the open. China’s largest brokerage completed a 13 billion yuan (US$1.9 billion) purchase of smaller rival Guangzhou Securities, its latest in a series of acquisitions.

Xiaomi shed 4.06 per cent to HK$9.92, continuing to fall to a new low since debuting on the Hong Kong stock exchange in July. Billions of its shares were unlocked for sale on Wednesday, marking the end to the smartphone maker’s IPO lock-up.

Sunny Optical climbed 4.48 per cent to HK$66.40 by midday, leading the information technology sub-index after it said on Wednesday that its shipment of handset lens sets in December increased by 42.1 per cent year-on-year.

CSPC Pharmaceuticals shot up 8.98 per cent to HK$12.38, boosting the health care sector which gained 8.64 per cent on Thursday, the most among the Hang Seng’s sub-index.

Carmakers were up, led by Brilliance China, which rallied 6.79 per cent to HK$6.6, Minth Group which gained 2.96 per cent to HK$26.10, and Geely Auto, which was up 2.89 per cent to HK$11.40. The sector has been struggling.

On Wednesday, Ning Jizhe, the deputy chief of China’s top planning body said policies will be rolled out to boost consumption of cars and home appliances.

On the mainland, solar and wind power firms soared on news that Beijing is planning to launch pilot projects to promote using green energy.

Solar panel components maker Longi Green Energy Technology rose 6.62 per cent to 20.29 yuan, solar cell maker Tongwei jumped 7.58 per cent to 8.94 yuan and Sungrow Power Supply boosted 5.62 per cent to 9.39 yuan.

In other news, according to Bloomberg, Citigroup suspended an equities trader in Hong Kong in the past few weeks as it started to examine the New York-listed investment bank’s dealings with some clients and if some traders properly disclose their financial interests in stock trades. This follows an industrywide probe last year by the Hong Kong Securities and Futures Commission into whether brokers in the city are giving the best prices to clients when trading.


Category: FinanceAsia

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