Consumer stocks lift China and Hong Kong’s markets to close higher, reversing the declines during a tumultuous week

Louise Moon

Consumer stocks lifted Chinese and Hong Kong indexes on Friday, as investors are betting that the Chinese government will dip into its coffers to provide financial stimulus to keep the economy growing.

Hong Kong’s Hang Seng Index rose 0.9 per cent to close at 25,734.22 on Friday. The gauge fell 0.8 per cent during the week, the fourth week of declines, weighed down by lacklustre corporate earnings and the impact of escalating protests that earlier brought the city’s airport to a standstill for two consecutive days.

The Shanghai Composite closed up 0.3 per cent at 2,823.82, leading the benchmark into three consecutive days of gains. It reversed last weeks losses, which were the largest in three months, and closed the week up 1.8 per cent.

The CSI 300 of large stocks in Shanghai and Shenzhen gained 0.5 per cent to 3,710.54.

Investors were banking on consumer stocks.

Some strong earnings by companies like Tsingtao Brewery and China Resources Beer Holdings attracted buyers on Friday, said Kenny Tang Sing-hing, chief executive of Royston Securities. Meanwhile, the market is banking on China’s government introducing stimulus measures after official retail sales earlier in the week were weaker-than-expected.

Traders are “still optimistic about the consumer market in mainland China, because [they expect] the government is going to use fiscal policies to stimulate the economy,” said Tang. “It is the main indicator of the economy. [The government] is likely to further reduce tax in the second half of the year.”

Among such stocks, China Resources Beer Holdings – the country’s biggest brewer who has a partnership with Dutch brewer Heineken – rose 7.8 per cent to a record 39.2 yuan, after posting a 24.7 per cent annual increase in net profit, and a 7.2 per cent gain in revenue.

Tsingtao’s shares rose by their daily 10 per cent limit, in line with liquor makers across the board. Kweichow Moutai, the world’s largest distiller, climbed 0.9 per cent to close the week at a record 1,054.60 yuan, while the industry’s second-in-line Wuliangye Yibin rose 0.3 per cent to 126.30 yuan.

Hong Kong-listed consumer stocks like China Mengnui Dairy and apparel company Shenzhou International Group Holdings followed the trend, rising 3.9 per cent and 4.8 per cent, respectively.

Rupert Hogg, who resigned as Cathay Pacific’s chief executive officer after market hours, speaking at a 9 May 2019 press conference at The Murray Hotel in Central. Photo: SCMP/Sam Tsang

Cathay Pacific Airways, Hong Kong’s hometown carrier, rose 2.1 per cent to HK$10.60, recovering from the two days of shutdown at the city’s airport that had sent its shares to a 10-year low. The carrier’s chief executive Rupert Hogg resigned after market hours, according to a report on China’s state television.

Cathay Pacific’s parent company Swire Pacific rose 2.3 per cent to HK$81.50, losing 0.4 per cent through the week. It has also recouped losses and is back at share prices from January, after dropping to lows of May 2018.

Li Ka-shing’s CK Asset Holdings had its biggest daily gains since January 4, advancing by 4.1 per cent, after the Hong Kong tycoon took out advertisements in the city’s major newspapers to call for calm. Property stocks advanced as investors picked out bargains from one of the worst-performing industry groups on the Hang Seng Index. Sun Hung Kai Properties rose 3.1 per cent, Link Real Estate Investment gained 2.4 per cent, and Henderson Land Investment added 2.3 per cent.

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