China, Hong Kong shares eke out small gains as investors await news on trade talks and Fed interest rate decision

Georgina Lee

Hong Kong’s Hang Seng Index eked out small gains on Tuesday as protests that have expanded to grievances beyond a now-sidelined extradition proposal continued to weigh on investor sentiment.

“Hong Kong is consumed by internal conflict. Outside events don’t matter as much,” said Francis Lun, chief executive of Geo Securities. “The city wallows in chaos.”

The Hang Seng closed up 0.14 per cent at 28,146.50.

Meanwhile, the Shanghai Composite Index closed up 0.39 per cent to 2,952.34, its highest level in three weeks.

Traders were awaiting developments beyond protests. Two days of trade talks between the world’s two largest economies kicked off in Shanghai on Tuesday. And an interest rate cut by the US Federal Reserve – the first in a decade – is expected on Wednesday Washington time.

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Ben Kwong Man-bun, a director at KGI Asia, said the Hang Seng Index will hover in a narrow range this week, and is unlikely to break through 27,750 to 28, 250, while the Shanghai Composite Index will continue to hover at 2,900 to 3,000.

“Investors are still watchful on any potential outcome that could emanate from the US China trade negotiation in Shanghai,” he said. “And the market is still trying to gauge whether China would also introduce further supportive monetary measures following the US Federal Reserve meeting.”

Fitch Ratings, while maintaining Hong Kong’s “AA+” rating on Tuesday, joined the chorus of those concerned about the long-term impact of protests on the reputation of the city.

Property stocks were battered in Hong Kong on Monday. But rose Tuesday, with Wharf Real Estate Investment closing as the top gainer on the Hang Seng, up 2.5 per cent to HK$49.60. Sun Hung Kai Properties rose 0.5 per cent at HK$127.8.

A large index point gainer was China Life Insurance, which rose 1.5 per cent to HK$20.45, as investors cheered it saying it expects its bottom line to grow by 115 per cent to 35 per cent from a year earlier.

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China Life in Shanghai also rose on the news, climbing 1.44 per cent to 30.36 yuan, making it the biggest index point gainer in the Shanghai Composite Index. Other insurers also climbed: China Pacific Insurance rose 2.46 per cent to 39.55 yuan. New China Life Insurance up 2.83 per cent to 56.61 yuan.

The CSI 300, which tracks blue chips on Shenzhen and Shanghai, rose 0.4 per cent to 3,870.32.

Focus Media Information Technology, which surged 7.6 per cent to 5.21 yuan. Investors appeared to be relieved by its announcement that its net profit for the first half dropped 76.8 per cent, in line with its own expectation announced in April.

Across both China and Hong Kong, gold-related stocks were up. The yellow metal’s appeal has shot up in a low-interest environment, and it is also seen as a safe haven during turmoil, such as the yearlong US-China trade war.

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China Silver Group surged by 10.45 per cent to 74 HK cents, while in China, YanTai Yuancheng Gold rose 6.6 per cent at 9.26 yuan, and Yintai Resources shot up 5.8 per cent to 15.05 yuan.

The spot gold price is US$1,426.40, not far off the six-year peak reached on July 18 when it hit US$1,446.10.

Elsewhere, Jinxin Fertility, an assisted reproductive services company that operates in China and the US, shot up nearly 5 per cent to HK$9.50 after getting high ratings by Citi – which sees “high and sustainable” market growth ahead – and Morgan Stanley. It debuted on June 25, with an IPO offer price of HK$8.54.

China Tobacco International – a newly listed global arm of China National Tobacco, which holds a cigarette monopoly in China – shot up 7.37 per cent to HK$26.95. Its fans hope it will eventually trade on the Stock Connect, pushing up its shares by southbound trading, and see it as booming in the home of the world’s largest number of smokers. Its critics, however, say it is a toy of speculators and does not have fundamentals to warrant its huge run-up from its debut at HK$4.88 in early June.

Additional reporting by Daryl Choo

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