Hong Kong and mainland China stocks started this week with gains, after 15 Asia-Pacific nations agreed to cooperate on reducing tariff and red tape in trade. Meituan led gains among three new index members in a proposed rebalancing exercise.
The Hang Seng Index advanced 0.9 per cent to 26,381.67 at the close of trading, halting a three-day slide. The Shanghai Composite Index climbed 1.1 per cent to 3,346.97, snapping up a four-day decline.
China and 14 other Asia-Pacific nations signed on Sunday the Regional Comprehensive Economic Partnership after eight years of negotiations. The deal is billed as the world biggest free-trade pact, covering about one-third of the world’s population and economy and excludes the US.
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Markets across the region also chalked up substantial gains, with the Nikkei 225 leading the charge with 2.1 per cent advance, while South Korea’s Kospi Index rose 2 per cent. Today’s gains added to a powerful two-week surge this month, taking the MSCI Asia-Pacific Index within 2.2 points of breaking its previous record in January 2018.
Markets were also buoyed by China’s latest set of economic data for October. Industrial production grew by 6.9 per cent in October year on year, beating estimates, according to the statistics bureau on Monday. Retail sales grew by 4.3 per cent for a third straight month of expansion.
“Data from Asia has been impressive today, suggesting that RCEP is the icing on the cake of a region set to recover faster, and generally outperform, in 2021,” Jeffrey Halley, senior market analyst for Asia-Pacific at Oanda, said in a note to clients. The RCEP pact among a widely disparate group of nations, he said, “is an achievement in itself.”
Meituan gained 3.7 per cent while Anta Sports and Budweiser Brewing APAC each jumped 5.9 per cent. The trio were included as new Hang Seng Index members in a rebalancing exercise. Swire Pacific slumped 2.1 per cent as the stock will be kicked out.
The changes, announced on Friday, will take effect on December 7, bringing the total index members to 52 from 50, the index compiler said. Meituan will carry a 5 per cent weight, while Anta and Budweiser will get 1 per cent and 0.5 per cent each, it added.
On the mainland, port operators and related stocks rallied on the back of the RCEP trade agreement. Jiangsu Lianyungang Port and Bohai Ferry Group soared to the daily cap of 10 per cent, while Jinzhou Port rose 8.1 per cent. All are listed in Shanghai.
Liquor stocks rose on the back of strong economic recovery and continued containment of Covid-19 in China. Shanxi Xinghuacun Fen Wine Factory surged by 9.2 per cent to 273.21 yuan. Kweichow Moutai, the world’s most valuable liquor stock, added 1.5 per cent to 1,730.05 yuan.
Some Chinese telcos continue to reel under a sell-off amid concerns about more sanctions. President Donald Trump is said to be planning a series of hardline policies against Chinese companies on his way out of the White House, Axios reported, citing unidentified senior officials.
China Mobile slipped 3.4 per cent to HK$48.30 while China Unicom declined 1.8 per cent to HK$4.89. Both retreated by more than 5 per cent on Friday. Tianqi Lithium plunged 7.7 per cent on an imminent cash crunch.
“Investors are still taking a wait-and-see attitude and leaning cautious, it would be too optimistic to assume that no more such incidents will happen in the next two months when Trump is still in office,” said Chi-Man Wong, head of research at China Galaxy International Securities.
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