Stocks, yuan gain after Trump's speech

Melody Chen

Hong Kong stocks and the yuan rose on positive signals from US President Donald Trump's inauguration speech, though traders expect volatility to continue.

The onshore yuan strengthened to 7.2798 per US dollar, gaining 363 points to reach its highest level in over a month, though traders expect continued volatility due to the uncertainty surrounding Trump's policies.

Chinese government statements of support for the currency and the failure of the central bank to ease this month are giving the yuan what is likely to be temporary strength, according to a recent report by Eastspring Investments.

The offshore yuan is expected to weaken to 7.41 per US dollar by year-end, and in a worst-case scenario of a 60 percent tariff imposed by the United States, it could fall to around 7.5, said Cindy Keung Ching, Greater China economist at Oversea-Chinese Banking Corporation.

In Hong Kong, the Hang Seng Index rose 180 points to close at 20,106, its highest level in nearly a month, with a total gain of 1,232 points over the past six trading days.

The Technology Index outperformed the market index's 0.91 percent climb, closing over 2 percent higher at 4,693 points.

Chip stocks were strong, with Semiconductor Manufacturing International (0981) surging 6.35 percent to hit a multi-year high, while Hua Hong Semiconductor (1347) rose 1.48 percent.

Mainland developer Country Garden (2007) surged by 17.5 percent after trading resumed following a nine-month suspension.

In China, Shenzhen's SZSE Composite Index closed at 10,305 points, up 49 points or 0.48 percent, while Shanghai's SSE Composite Index fell 1 point to close at 3,242 points.

The impact of Trump's presidency on A-shares may have already been priced in, and the long-term performance of the mainland market will still be mainly determined by domestic economic fundamentals and policy responses, according to China International Capital Corporation (3908).