Hong Kong stocks capped another volatile trading day amid confusion surrounding the New York Stock Exchange’s plan to delist three Chinese telecoms giants, while index compiler S&P Dow Jones Indices decided to retain them in its global benchmarks.
The Hang Seng Index edged up 0.2 per cent to 27,692.30 to complete a third day of advance, reversing earlier losses. The Shanghai Composite Index also rebounded, adding 0.6 per cent.
The NYSE is committed to delisting three Chinese telecommunications companies if their subsidiaries – China Mobile, China Unicom and China Telecom – are found to be affected by a US blacklist, according to a source familiar with the matter.
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A day earlier, the exchange said it was scrapping its December 31 plan to remove their American depositary shares. S&P Dow Jones Indices on Wednesday said that it would not remove the trio from its global benchmarks.
China Unicom gained 3.5 per cent to HK$5.02, recovering from a fall of as much as 3.1 per cent. China Mobile rose 1.2 per cent to HK$46.65, reversing from a 2.2 per cent slide. China Telecom rose 3.7 per cent to HK$2.24. The trio surged on Tuesday, adding HK$58.7 billion (US$7.56 billion) in value.
“All this news is very difficult for investors to handle,” said Louis Tse Ming-kwong, managing director of Wealthy Securities. “These decisions have created a lot of volatility.”
Tse added that “a whirlpool of a US-China political tussle” has put investors in a fix. The suggestion that the NYSE will insist on delisting “means there’s a possibility that they’re going to also delist the ADRs of [Chinese] state oil companies as well. That could also affect the [Hang Seng] Index,” he added.
Markets in the Asia-Pacific fell. Japan’s Nikkei 225 dropped 0.4 per cent, while South Korea’s Kospi retreated 0.8 per cent. Australia’s S&P/ASX 200 slumped 1.1 per cent.
Democrat Raphael Warnock won one of Georgia’s two Senate run-offs on Wednesday, putting control of the Senate within the party’s reach. Senate control would smooth the way for US stimulus spending and ease President-elect Joe Biden’s legislative agenda.
“Equities are not taking the developments positively yet, reflecting the Democrat’s progressive agenda dichotomy of tax and spending,” said Stephen Innes, chief global markets strategist at Axicorp.
Elsewhere, China’s services sector activity expanded at a slower pace in December, a private sector survey showed on Wednesday, as sporadic coronavirus outbreaks tempered the recovery in consumer confidence and weighed on new business growth.
The Caixin/Markit services Purchasing Managers’ Index eased to 56.3, a three-month low, in December from 57.8 in November. However, this remained above the 50-mark that separates growth from contraction on a monthly basis, pointing to brisk expansion.
Five companies started trading in Hong Kong and China markets with mixed fortunes.
Zonbong Landscape Environmental, which provides landscaping and ecological restoration services, gained 2.5 per cent to HK$2.05 while technology solutions provider Newlink Technology fell 6 per cent to HK$4.10.
Zuming Bean Products rose 44 per cent to 21.86 yuan in Shenzhen while auto electronic display services provider HAXC Holdings soared 128.7 per cent to 87.03 yuan. In Shanghai, cables and wires maker Xinya Electronics rose 44 per cent to 24.41 yuan.
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