Stocks rise in HK, China as Shanghai tech board’s kick-off signals further liberalisation in the Chinese capital market

19-Mar-2019 Intellasia | South China Morning Post | 6:00 AM Print This Post

Equities rose in Hong Kong and China on Monday, as investors await the introduction of a bidding process that will allow technology start-ups to raise capital in Shanghai, another step in the liberalisation of mainland China’ equity markets.

The Shanghai Composite Index gained 2.5 per cent, or 74.67 points, to 3,096.42 at the close, while the benchmark in Shenzhen added 2.7 per cent to 1,685.79.

In Hong Kong, the Hang Seng Index rose by 1.4 per cent, or 396.75 points, to 29,409.01 for its highest close since June 20, while the China Enterprises Index, which tracks the performance of Chinese companies, or H shares, on the exchange, climbed 1.5 per cent.

Shanghai’s stock exchange, which was ordered by Chinese President Xi Jinping in November to open a new board for technology start-ups, will accept submissions for initial public offerings from Monday, according to Beijing-based media group Caixin.

Sentiment was also buoyed by traders ramping up buying of companies that are expected to report solid first-quarter earnings. A total of 371 mainland China companies will release their earnings this week, according to data compiled by Bloomberg.

“We are in the middle of the earnings season, so the market is now returning to corporate fundamentals,” said Wang Zheng, chief investment officer at Jingxi Investment Management in Shanghai. “Chinese traditional liquor producers are the ones that are seen by investors as the safest bet in terms of earnings.”

A gauge of staple consumer stocks made up mostly of liquor makers on the CSI 300 Index surged by 5.9 per cent for the biggest gain among 10 industry groups. Kweichow Moutai rose 4.2 per cent to a record 810.09 yuan, taking its market capitalisation past 1 trillion yuan (US$149 billion). Anhui Golden Seed Winery jumped by the 10 per cent daily limit to 6.48 yuan. Luzhou Laojiao surged by 10 per cent to 58.60 yuan and Wuliangye Yibin rallied by the same margin to 86.66 yuan.

Shenwan Hongyuan Group, a Shanghai-based brokerage, said profits at most liquor producers had probably risen by between 10 per cent and 20 per cent in the first quarter, with the industry’s benchmark product, Moutai liquor, in short supply.

Companies linked to electronic cigarettes tumbled after China’s central television said in an annual consumer day gala show on Friday night that the product was detrimental to consumers’ health.

Shanghai Shunho New Materials Technology, which sells electronic cigarettes through a controlled unit, tumbled by 7.8 per cent to 11.54 yuan. Shantou Dongfeng Printing, a maker of cigarette packaging materials, fell 0.6 per cent to 10.55 yuan.

In Hong Kong, shares of Aoyuan Healthy Life Group, a landscaping and property management company, jumped by 22 per cent on their trading debut to HK$4.45, from their IPO price of HK$3.66.

Italian luxury goods maker Prada declined by 11 per cent to HK$22.35 after it said its operating profit had deceased by 10 per cent from a year earlier because of less spending by Chinese tourists in Hong Kong and Macau.

Hong Kong subway operator MTR added 0.3 per cent to HK$47.70 on Monday, reversing a loss of as much as 1.3 per cent, despite a collision between two of its trains during the test run of a new signalling system early in the morning.


Category: Hong Kong

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