Last year was a nightmare for investors. But the main benchmarks of Hong Kong and mainland China gave investors plenty of love in the first month of the new year.
Hong Kong’s Hang Seng shot up 8 per cent in January, after suffering a loss of 15 per cent over all of last year.
On Thursday, the Hang Seng closed at the highest level in four months – 27,942.47, or a 1.1 per cent gain.
Meanwhile, the Shanghai Composite Index was up 3.6 per cent in January. Last year, it was the world’s worst performing market – down by 25 per cent. It closed on Thursday up 0.4 per cent, like the Hang Seng closing out the month on a positive note.
Mainland China markets did so well in January that the country reclaimed its title as home to the world’s second-largest stock market, wresting the title from Japan.
Of course, there is no telling whether markets can keep the pace.
January of 2018 started off strong for the Hang Seng – which went up nearly 10 per cent – and the Shanghai Composite – which rose 5.7 per cent.
Then, well, there was the US-China trade war. And Federal Reserve rate increases. And China’s economic slowdown. And internet giant Tencent’s fall as China cracked down on gaming.
Right now, local traders have been focused on the trade war. China and US officials are scheduled to wrap up two days of trade talks on Thursday Washington time. Traders in Hong Kong and the mainland may well wake up to market-moving news.
But on Thursday, traders were reacting positively to the US Federal Reserve keeping rates steady as well as to the official gauge of China’s manufacturing activity that came in better than expected.
Tencent, the most heavily weighted stock on the Hang Seng, gained 0.5 per cent to HK$346.00. The Chinese internet firm has soared 11 per cent in the past month.
Sunny Optical Technology, a smartphone component manufacturer, surged 3.3 per cent to HK$77.10. AAC Technologies, which supplies acoustic components to Apple, also rose 1.3 per cent to HK$48.50.
The Hang Seng China Enterprises Index, known as the H-shares index, gained 1.3 per cent to 11,035.73.
Property developers also rose after the Fed showed a cautious approach toward future rate increases on Wednesday Washington time. Hang Lung Properties gained 1.5 per cent to HK$17.10. Swire Properties climbed 2.5 per cent to HK$30.50.
“The US Fed’s decision was expected by the market,” the Hong Kong Monetary Authority, the city’s de facto central bank, said in a statement. “We note that the Fed is adjusting their views on the pace of interest rate increase and progress of balance sheet reduction. We believe the Fed would continue to take into account factors such as US inflation and economic situation in determining its policy rate level.”
Hong Kong department store operator The Sincere Company soared 26.3 per cent to 20 Hong Kong cents, before it suspended share trading in late morning trade. The company did not explain the reason for the suspension.
Meanwhile, in China, government statistics showed the country’s manufacturing Purchasing Managers’ Index (PMI) for January was 49.5, slightly better than December’s 49.4 and higher than a previous forecast of 49.3 in a Reuters survey of analysts.
But it was the second month the figure stayed below the 50-mark that separates expansion from contraction.
Among other indexes, the large-cap CSI300 rose 1.1 per cent to 3,201.63. The Shenzhen Component Index reversed losses and inched up 0.1 per cent to 7,479.22. The start-up board index ChiNext edged 0.2 per cent lower at 1,227.99.
Elsewhere in Asia, Japan’s Nikkei 225 rose 1.1 per cent to close at 20,773.49. Australia’s S&P/ASX 200 and South Korea’s Kospi dropped 0.4 per cent and 0.1 per cent to 5,864.70 and 2,204.85 respectively.
Additional reporting by Enoch Yiu
This article Hong Kong’s Hang Seng delivers a terrific January – with an 8 per cent gain first appeared on South China Morning Post
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