Hong Kong and mainland China stocks finish morning higher after Beijing releases economic data
Originally published at the South China Morning Post on January 19, 2016.
Hong Kong and mainland China stock markets ended higher after a choppy morning session on Tuesday, with stocks reacting positively to mainland economic growth data that fell in line with investors’ expectations and Beijing’s targets.
The mainland economy grew 6.9 per cent in 2015 and 6.8 per cent in the fourth-quarter of last year, the National Bureau of Statistics said on Tuesday, within the government’s target of “about 7 per cent”.
Brett McGonegal, co-chief executive of Reorient, said the data showed China’s economy was still performing quite well, in contrast to overseas markets.
“The market was so worried there would be a downside to that [economic growth] number and people were waiting to see, to get that vote of confidence,” McGonegal said, adding that the People’s Bank of China’s move to decouple from the US dollar as a pegging mechanism was a “good call”.
“I think now you’ll see the US and Chinese market decouple. The US market is a clear read through to an underperforming economy and China is presumed to be in the same position but I think the numbers are showing differently,” he said.
In Hong Kong, the Hang Seng Index closed the morning session up 0.78 per cent or 149.30 points at 19,386.75, while the H-share index that tracks mainland companies listed in Hong Kong closed at 8,260.05, up 1.54 per cent or 125.24 points.
Among the stocks with the highest turnover, HKEx fell 1.57 per cent to HK$169.80, Tencent rose 1.32 per cent to HK$137.8, HSBC shed 0.64 per cent to HK$54, and China Mobile gained 2.43 per cent to HK$82.05.
McGonegal said that he saw the Hong Kong market mostly tracking the US market more than mainland China’s moving forward.
“I think the Hong Kong market is stuck in this quandary of being pegged to the US dollar. It doesn’t bode well for the Hong Kong market,” he said.
The Shanghai Composite Index closed the morning up 1.64 per cent or 47.74 points at 2,961.58, while the CSI 300 – which tracks the large-caps listed in Shanghai and Shenzhen – finished at 3,173.49, up 1.37 per cent or 42.76 points.
The Shenzhen Composite Index finished at 1,856.08, up 1.41 per cent or 25.76 points, while the Nasdaq-style ChiNext rose 0.78 per cent or 17.02 points to 2,191.96.
In December, industrial production in mainland China increased by 5.9 per cent year on year, down from November’s 6.2 per cent rise. Retail sales rose by 11.1 per cent year on year, down from November’s 11.2 per cent, and fixed assets investment, excluding rural areas, increased by 10 per cent, down from November’s 10.2 per cent.
The PBOC set the yuan mid-price at 6.5596 to the US dollar, weaker by 6 basis points from Monday, when it was set 47 basis points stronger. It set the mid-price against the euro stronger by 215 basis points to 7.1487, and stronger by 215 basis points at 5.5884 for every 100 yen. Against the pound, the mid-price was set 63 basis points stronger at 9.3640. The currency is allowed to be traded by up to 2 per cent either side of the mid-price.