HK stocks rise on Wall Street gains, China slips

01-Dec-2016 Intellasia | Reuters | 6:00 AM Print This Post

Hong Kong stocks edged up on Wednesday morning, taking their cue from Wall Street, but gains were capped as investors remained cautious ahead of an OPEC meeting and Italy’s referendum result.

The benchmark Hang Seng index added 0.1 percent, to 22,766.58 points while the Hong Kong China Enterprises Index gained 0.1 percent, to 9,852.73 points. The HSI index is poised to drop more than 0.7 percent for the month of November.

Risk appetite in the Hong Kong market was curbed ahead of a meeting of the Organisation of the Petroleum Exporting Countries (OPEC) in Vienna to discuss a planned production cut in an effort to curb production.

Investors were also cautious as political risk resurfaced in Europe ahead of a referendum in Italy this weekend, while bullish US GDP data strengthened expectations for a faster pace of interest rate hikes.

In China, the blue-chip CSI300 Index is set to snap a seven-day winning streak, as selling in the futures market amid signs of liquidity stress triggered profit-taking.

The blue-chip CSI300 index fell 0.7 percent, to 3,539.62 points at the end of the morning session. while the Shanghai Composite Index lost 1.0 percent, to 3,251.40 points.

For the month, CSI300 is set to rise roughly 6 percent, its best monthly gain in eight months.

The government’s efforts to steady the sliding yuan currency and curb capital outflows added to fears of a liquidity squeeze in the banking system, which hit equity and commodities markets.

Energy and the raw materials sector suffered in both Hong Kong and China, dragged by a slump in commodity prices.

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An index tracking thermal coal prices in China lost nearly 5 percent in the morning, while China’s metal futures also tumbled, amid signs of a spike in short-term borrowing costs.

“There’s a wave of stock reallocations targeting traditional sectors among funds after Trump’s (presidential) win, but now the new economy, including the tech sector, is recovering as the influence of the reallocation is fading,” Linus Yip, strategist at First Shanghai Securities Ltd said, referring to Hong Kong stocks.

Yip said the Hong Kong market would have a short-lived rebound and remain roughly flat overall due to a sluggish performance recently among heavyweights, including Tencent Holding Ltd, AIA Group Ltd and China Mobile Ltd

Most sectors in Hong Kong rose, with telecommunication shares among the best performers. China Unicom Hong Kong Ltd jumped nearly 8 percent by midday.

In China, most sectors weakened but property shares rebounded after losing ground on Tuesday following the Shanghai regulator’s announcement of fresh home purchase curbs.

The sector was lifted by index heavyweight China Vanke Co Ltd, which climbed 3.4 percent in the morning, in the wake of China Evergrande Group’s announcement released late on Tuesday that it had bought more shares in China’s biggest property developer.


Category: Hong Kong

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