Stocks take off on trade-deal hopes

Top News | AGENCIES 5 Mar 2019

Hong Kong stocks and A shares surged yesterday, adding to recent gains after reports that Washington and Beijing are close to reaching a deal to end their year-long trade war and as China prepares for the opening of its annual session of parliament.

The Shanghai Composite Index was 1.12 percent higher, breaking through the 3,000-point level to end at 3,027.58 points.

The turnover of A shares was above 1.21 trillion yuan (HK$1.42 trillion).

The Hang Seng Index rose 0.51 percent to 28,959.59 on market turnover of HK$149.79 billion.

The top gainer in the index was CSPC Pharmaceutical, which rose 4.37 percent, while the biggest loser was China Mobile, which fell 2.68 percent. Benchmark heavyweight Tencent surged 3.15 percent and AIA decreased 0.63 percent. Zhang Yanbing, an analyst at Zheshang Securities, said the rally was a continuation of market strength "prompted by the combination of many favorable factors" that have emerged since October last year.

He said the news of a possible agreement between China and the United States, and the opening of the annual session of China's parliament today, could be seen as factors driving gains yesterday.

"It's unlikely that stocks will continue to see rapid increases in the near term as profit-taking pressure builds up," said Dai Ming, a Shanghai-based fund manager with Hengsheng Asset Management.

"People will be looking for detailed measures - such as tax cuts from the policy meetings - and such policy hopes should put a floor under stock prices too," he said.

Kerry Craig, JP Morgan's global market strategist, also reminded investors to tread cautiously.

"There could be a chance for a disappointment," he said. "It could be phased in over a number of years. There's still questions about how and what China will actually buy to try to reduce its deficit."

Meanwhile, the yuan extended its lead over Asian peers this year, strengthening 0.2 percent to 6.7030 per dollar in offshore trade, edging near its seven-and-a-half-month high of 6.6737 hit last week.

The currency has jumped almost 2.7 percent in 2019, the most in the region, after slumping more than 5 percent last year.

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