HSI advances despite weak China trade data

Hong Kong stocks advanced yesterday, despite the news that China's exports fell much faster than expected last month.

And four big state-owned mainland banks are expected to cut interest rates on yuan deposits today, state-run media Securities Times reported, adding that they have also been told to lower US dollar deposit rates.

The benchmark Hang Seng Index rose by 152 points or 0.8 percent to close at 19,252 points.

Tech stocks led the rally, with Alibaba (9988) up 2.1 percent.

Financial stocks also saw a gain, with HSBC (0005) adding 1 percent. Standard Chartered (2888) edged up 0.9 percent on reports that the lender was in talks to sell its aviation finance unit.

Shares of Haichang Ocean Park (2255) once plunged nearly 40 percent and entered into cooling-off periods multiple times due to the volatility. But the firm said later that it is not aware of any reasons for price movements.

Techtronic Industries (0669) rebounded 5.7 percent after the firm denied all allegations by short seller Jehoshaphat Research.

The rally came as data from China's Customs Bureau showed exports slumped 7.5 percent year-on-year in May, much larger than the forecast 0.4 percent fall and the biggest decline since January.

Imports contracted 4.5 percent, slower than an expected 8.0 percent decline and April's 7.9 percent fall.

During the period, China's exports to Russia, however, surged 75.6 percent.

This came as UBS said China's economy is facing downside risks, noting that the country's economic activities grew at a slower pace in May compared to the previous month.

Meanwhile, foreign reserves in China and Hong Kong both fell in May.

The country's foreign exchange reserves - the world's largest - fell by US$28 billion (HK$218.4 billion) to US$3.177 trillion last month.

The yuan dropped 2.7 percent against the dollar in May, while the US dollar rose 2.5 percent last month against a basket of other major currencies.

China has increased its gold holdings for seven consecutive months. The country held 67.27 million fine troy ounces of gold at the end of May, up from 66.76 million ounces by the end-April.

In Hong Kong, foreign currency reserve assets fell by US$6.4 billion to US$421 billion as of the end of May.