Hong Kong stocks up 6.3 per cent in first two weeks of September, as sentiment improves on eventual US-China trade deal

Georgina Lee

Hong Kong ‘s Hang Seng Index is on fire this month, posting gains of 6.3 per cent in just two weeks, as traders grow more optimistic that the US and China will work out their differences on trade.

The Hang Seng closed at 27,352.69 after gaining nearly 1 per cent Friday.

Its two-week performance contrasts with August, when it lost 7.39 per cent over the month.

The gains came despite China’s markets being closed for the Mid-Autumn Festival, meaning there was no southbound traffic on the Stock Connect. Southbound flow from the mainland generally accounts for roughly a tenth of the main board turnover.

Hence, when the southbound trading starts back up next week, that could support further upwards momentum in the index, some analysts say.

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“The Hang Seng could see further upside even to 30,000, if for the next week the index rises past the 27,778 level, which was the July month end close before the index gave in to the August monthly loss,” said Linus Yip, chief strategist at First Shanghai Securities.

Analysts said more conciliatory tones by US and Chinese officials helped ease investors’ angst over the trade dispute between the two countries. That is fuelling the return of investors’ money into equities from other safe haven assets such as US treasuries, which saw 10-year yields on Thursday rise to 1.789 per cent, a six-week high. Bond yields move inversely to price.

The latest positive gesture came from president Donald Trump, who said on Wednesday that he would delay a planned increase in tariffs from 25 per cent to 30 per cent on US$250 billion of Chinese goods to avoid escalating trade tensions ahead China’s National Day on October 1. That has helped Hong Kong stocks.

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“With the US S&P 500, Nikkei 225 in Japan all having edged close to their respective record high levels of this year, the Hang Seng, by comparison, is a laggard in the current September wave of equity rally,” said Lin.

Top percentage gainers were Geely Auto, up 4.8 per cent to HK$14.12.

Outside the blue chips, other automobile stocks also did well: Brilliance China rose 4.1 per cent to HK$9.71; BYD rose 3.9 per cent to HK$42.7. Guangzhou Automobile Group climbed 5.3 per cent to HK$8.5. Their gains came on news that regulators in Guiyang city will ease restrictions an how many cars can be sold in a year, helping to boost demand for cars.

Elsewhere, Sun Hung Kai Properties reversed its intraday loss to close up by 0.3 per cent at HK$117.2. The stock had dropped earlier in the day after company chairman Raymond Kwok said that occupancy rates at the company’s hotels have plunged on average by 30 to 40 per cent amid ongoing protests.

Leading the index up in index point terms were financials, with insurer AIA up 1.9 per cent to HK$80.7 and China Construction Bank rising 1.1 per cent to HK$6.24.

HKEX, the city’s bourse operator, rose 1.4 per cent to HK$240.8, reclaiming some of the previous day’s loss on news that it had proposed a US$36.6 billion takeover bid of the London Stock Exchange, which initially upset investors.

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