Hong Kong Set To Halt Losing Streak As Chinese Shares Climb

By Business and Financial Times

Hong Kong shares set course for their first advance in six days on Tuesday, led by gains for Chinese companies as mainland markets recovered from a sell-off the previous day.

The Hang Seng Index added 0.4% to 26,311.97 by noon after sliding as low as 26,067.51, while the Hang Seng China Enterprises Index of large mainland companies listed in Hong Kong rose 0.9%. Energy producers China Shenhua Energy and CNOOC added 4.5% and 3.9%, contributing most to the gauge`s gains by points. Geely Automobile Holdings slid 3.4% after reporting a 14% on-year increase in September sales volume to 124,429 units. Sales in September 2017 had risen 42% from a year ago.

The gains follow after a five-day losing streak eroded 5.7% of the index`s value as rising U.S. government bond yields and a strengthening dollar threatened to pull cash away from emerging market assets. Lingering worries over U.S.-China trade relations and a slowdown in Asia`s largest economy have persistently weighed on sentiment. The International Monetary Fund on Tuesday cut its global growth forecast to 3.7% for this year from an April forecast of 3.9%.

Market participants are not viewing Tuesday`s gains in Hong Kong as the start of a rebound.

“The Hong Kong stock market is still facing an overhang from the yuan`s depreciation. A strong rebound will need a strengthening yuan,” said Jason Lee, vice president for stocks at Hong Kong investment consultancy Investment Strategy Institute. Having lost some confidence recently, investors were “hesitating to enter” the market, he added.

In the mainland, the Shanghai Composite was up 0.5% after suffering its worst single-day drop since June on Monday, when markets reopened after the weeklong National Day holiday. The yuan traded onshore rose 0.2% against the U.S. dollar to 6.9160 after slumping 0.9% on Monday.

China on Monday said it will roll out more measures to improve the tax refund policy for the export of goods while shortening its process, in a bid to ease the burden on enterprises and secure stable growth of foreign trade. The measures include reducing tax brackets to five from seven currently and raising some rates.

China Overseas Land & Investment gained 1.7% after reporting a 27.5% increase in September contracted property sales to HK$26.38 billion ($3.37 billion).

Guangzhou R&F Properties added 3.6% following a 39% increase in contracted sales for September to 10.28 billion yuan ($1.49 billion).

China Jinmao Holdings Group climbed 1% after contracted sales for September doubled from a year ago to 8.54 billion yuan.

Freight forwarding company Sinotrans increased 0.7% after saying the China Securities Regulatory Commission approved its proposed merger with Shanghai-listed unit Sinotrans Air Transportation Development.

China Machinery Engineering rose 1.1% after saying it won a contract worth about $97 million in Bolivia for the construction of a carbonate lithium plant.

Electronics components trader Willas-Array Electronics (Holdings) declined 0.7% after saying it expects consolidate net profit for the six months ended Sept. 30 to have decreased significantly.

This article provided by NewsEdge.