Hong Kong shares jump to defy unrest

Top News | Kevin Xu and Reuters 20 Nov 2019

Hong Kong stocks closed at a one-week high yesterday, with the benchmark Hang Seng Index jumping 412.71 points to 27,093, on hopes of a trade deal and China stimulus, despite the ongoing social unrest.

Mobile phone gear makers climbed, led by Aac Technologies, which grew 6.1 percent to HK$56.50 and became the best blue-chip performer.

Sunny Optical went up 5.1 percent to HK$129.80.

Shares of pharmaceutical producers also increased. CSPC Pharmaceutical added 3.65 percent to HK$21.30 and Sino Biopharmaceutical rose 4.85 percent to HK$11.68.

Andrew Wong Wai-hong, chairman of Anli Securities, told The Standard the Hang Seng Index is likely to rise above 28,000 points before the year ends if the United States and China reach an agreement.

He added that many investors think the Hong Kong stock market can climb more than 10 percent in the first quarter of 2020.

"It is not very difficult to achieve, because you can see the interest rate in the global market is very low, and every investor is finding a chance to invest," he said.

"Though Hong Kong seems not very good in the past week, you can see the Hong Kong dollar remain stable.

"This means funds have not left Hong Kong, because the investors think, if the United States and China can sign a contract, the corporate profit will rebound in the next one or two quarters, since the business of many listed companies in Hong Kong is not in the city."

Wong added: "They think the Hong Kong problem is just a short-term problem. That is why the unrest has not made the HSI drop a lot over the past week."

Wong said for the valuation, the Hong Kong stock market is "not too expensive, and it has lagged behind many stock markets." He added the "US stock market is in a record high, the Europe market sentiment is not bad, and Asian markets like Japan or Korea are also good."

Meanwhile, sentiment across global equities received a boost after China's central bank unexpectedly trimmed a closely watched money market funding rate on Monday, the first such cut in more than four years and a signal to markets that policymakers are ready to act to prop up slowing growth.

In the mainland, the Shanghai Stock Exchange Composite Index was also higher at 2,933.99, rising by 24.79 points, or 0.85 percent yesterday. The Shenzhen Stock Exchange Composite Index was at 1,646.80, up by 29.61 points, or 1.83 percent.

The cut in the seven-day reverse repurchase rate to 2.50 percent from 2.55 percent fueled expectations that Beijing will continue to ease monetary policies and unveil fresh fiscal stimulus.

Investors were also encouraged that Alibaba's mega listing was not affected by the deepening political crisis in Hong Kong.

kevin.xu@singtaonewscorp.com

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