Hong Kong stocks close morning session higher but still below 19,000
Originally published at the South China Morning Post on January 22, 2016.
Despite jumping above the 19,000 level at the open, trading at the Hang Seng Index fell back below the mark during the session though it closed the morning session higher tracking a rebound in oil prices and gains in US stocks overnight. Chinese stocks, however, continued to edge down.
The Hang Seng Index finished at 18,804.10, up 1.41 per cent, or 261.95 points, from the previous day’s close. The Hang Seng China Enterprises index was up 1.76 per cent at 7,973.83.
“I think it should rise again, I think we have seen the worst already. The Hong Kong market is way oversold,” said Francis Lun, chief executive of GEO Securities. “I think the market is set for a recovery to the 20,000 level – it may not be next week, but (perhaps) this month.”
Lun added that the recovery in oil prices and the overseas markets overnight also helped boost local stocks. Oil prices settled higher in both New York and London on Thursday, with WTI futures briefly rising above US$30 a barrel, although the level still remains one of the lowest seen in about a decade.
Among the stocks with the highest turnover, Tencent rose about 2.86 per cent to HK$136.9, CNOOC gained about 4.67 per cent to HK$6.72 and China Mobile increased by about 2.44 per cent to HK$81.95 while China Life fell about 1.58 per cent to HK$18.70 and HKEX dropped about 0.99 per cent to HK$160.90.
Metals, banking, insurance and mining were some of the industries leading the gains, rising by about 1 per cent on average at the midday break.
“(Banking) is recovering from an unreasonably low level,” Lun said. “For HSBC, you have upside potential. It’s better to buy HSBC for the yield than to buy corporate bonds (now).”
HSBC rose about 0.48 per cent to HK$52.15.
On the mainland, however, the Shanghai Composite index closed the morning session at 2,872.42, down 0.28 per cent, while the CSI 300 – which tracks large-caps listed in Shanghai and Shenzhen – shed 0.26 per cent or 8.07 points to 3,073.28.
The Shenzhen Composite index fell 0.68 per cent to 1,788.67 while the Nasdaq-style ChiNext dropped 0.63 per cent to close at 2,099.10.
The People’s Bank of China on Friday set the yuan’s mid-price against the US dollar at 6.5572, 13 basis points stronger than Thursday, when it set the mid-price 7 basis points weaker. But it set the yuan’s mid-price against the euro stronger by 170 basis points at 7.1216, and the yuan’s reference rate for every 100 yen stronger by 259 basis points at 5.5778. The Chinese currency’s mid-price against the pound was set 105 basis points weaker at 9.3352.
Traders are allowed to trade up to 2 per cent either side of the mid-price for the day.
Offshore yuan continue to fall on Friday morning to trade at 6.6102 per US dollar. It has been falling for four days in a row after a strong 0.5 per cent gain on Monday. On a weekly basis, however, it is still up 0.08 per cent after rising 1 per cent last week following the PBOC’s intervention. Onshore yuan rose 0.02 per cent to 6.5796 against the US dollar, stronger by 0.07 per cent this week after a rise of 0.14 per cent last week.
The spread between the two narrowed to 306 basis points, down from a record 1,400 basis points on January 7.
All major US indices closed higher overnight, with the Dow Jones Industrial Average finishing up 0.74 per cent at 15,882.68, the S&P 500 closing up 0.52 per cent at 1,868.99, and the Nasdaq Composite finishing up 0.01 per cent at 4,472.06.