HK, mainland stocks stay on a positive roll as Beijing acts to boost liquidity and US-China trade talks get under way

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

Hong Kong and mainland markets posted gains in Monday early trading, after China’s central bank moved to encourage lending to boost the slowing domestic economy and Beijing and US officials began two days of high-stakes trade talks.

By midday, the Hang Seng Index was up 0.67 per cent, to 25,798, while the Hang Seng China Enterprises Index rose 0.75 per cent, 75.38, to 10,105.03.

After mainland markets closed on Friday, the People’s Bank of China cut the amount of cash lenders must hold as reserves by 1 percentage point. The required reserve ratio will drop by 0.5 percentage point on January 15 and by the same amount again on January 25, the bank said on its website.

The cut means 800 billion yuan (US$117 billion) will be released in liquidity, offsetting a squeeze before the Chinese New Year holiday at the beginning of February.

Castor Pang Wai-sun, head of research at Core Pacific-Yamaichi, noted that US stocks shot up Friday after the reserve ratio announcement, though other factors were in play as well including a big gain in new jobs in the US.

“That tells the Hong Kong stock market it has the chance to have a strong rebound, particularly as the representatives from China and the US will discuss trade for two days. That helps the markets to have a very good atmosphere.”

A team led by deputy US Trade Representative Jeffrey Gerrish began a two-day meeting with China officials on Monday in Beijing, seeking to make progress toward ending the US-China trade war.

“I expect the Hang Seng may have the chance to test 26,000 within these two days, But other than that, whether it still has the chance to go further really depends on if there is any news about the trade discussions between the two countries,” said Pang. “In the short term, support for the Hang Seng should be around 24,500.”

On the mainland, the Shanghai Composite gained 0.44 per cent, or 10.96 points, to 2,525.83, while the CSI 300 of large caps was up 0.36 per cent, or 10.99 points, to 3,046.86.

Also after the Hong Kong market closed on Friday, US Federal Reserve Chair Jerome Powell signalled the Fed may pause interest-rate increases, which boosted sentiment among stock traders.

The Hang Seng and Shanghai Composite both jumped more than 2 per cent in trading on Friday after a rocky start to the new year. Last year, the Shanghai benchmark lost 25 per cent making it the world’s biggest major market loser and the Hang Seng was down 15 per cent.

Banks in Hong Kong and the mainland were up in Monday trading.

In Hong Kong, the Hang Seng Bank rose 0.95 per cent HK$169.40, while the Bank of China Hong Kong gained 1.6 per cent during morning trading before retreating to end for the midday break down 0.36 per cent to HK$28.00. HSBC Holdings was up 1.01 per cent to HK$65.00, while ICBC was up 0.36 per cent to HK$5.54.

On Sunday night, Xiaomi Group announced that it bought over 65 million shares of TCL Corp., giving it a 0.48 per cent stake in the Guangdong-based home appliance maker’s share capital as of January 4.

Under the agreement, signed on December 29, the two companies pledged to carry out joint research on the development of smart products and electronic devices.

By midday on Monday, TCL had risen 1.38 per cent to HK$2.94, and Xiaomi was up 1 per cent to HK$12.08.

Shares of New China Life plummeted 7.57 per cent to HK$28.10 in Hong Kong, and 8.24 per cent to 39.85 yuan in Shanghai after Beijing Business Daily cited an anonymous source as saying the company’s chair and president, Wan Feng, may not be re-elected and could relocate to ShinKong Insurance.

A media spokesperson for the company said reports were rumours at this stage and only in March after the company meeting will it be clear whether Wan Feng will continue the position he has held since 2016. Three years is the usual amount of time for the position, the spokesperson added.

China Mobile climbed 1.4 per cent to hit a five-week high of HK$77.90 during morning trading after Nomura upgraded the company to “buy” from “neutral”, raising the target price from HK$79 to HK$102. It said the group is set to become a key beneficiary in the development of 5G. By midday, it was up 1.04 per cent to HK$77.60.


Category: Hong Kong

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