Looming US tariffs prompt buyers to beware

Business | Avery Chen 11 Dec 2019

Hong Kong stocks closed lower as daily turnover reached a more-than-two-month low, with investors waiting for news about the Sino-US trade talks, with the next round of tariffs due on December 15.

The benchmark Hang Seng Index fell 58.11 points, or 0.22 percent, to 26,436 yesterday, with a market turnover of HK$61.9 billion, the lowest since September 26. The China Enterprises Index meanwhile lost 0.1 percent to 10,395 points.

Mainland developers continued to outperform the market with China Overseas Land and Investment (0688) rose 2.52 percent to HK$28.45, becoming the best performer among blue-chip stocks.

Shares in Chinese orange juice producer Summi (Group) (0756) rose 96.33 percent to HK$0.21 after issuing a positive profit alert. The company expects record profits of just less than 300 million yuan (HK$333.53 million) for 2019, compared with a loss of 97.5 million yuan in 2018, thanks to gains of 350 million yuan from a loan settlement agreement.

Everbright Sun Hung Kai expects that Hang Seng Index will trade between 24,000 - 30,000 in 2020, with the index peaking in the third quarter ahead of the US presidential election.

Securities strategist Kenny Ng said the Hong Kong equities will be further derailed by uncertainties such as external markets' recession and geopolitical factors.

But local stocks may create opportunities next year, due to attractive valuation when compared with other developed markets, expectations of mainland China's economic recovery and supportive stimulus measures by the mainland government.

The asset manager said it preferred stocks in rigid-demand consumption, 5G, and property management sectors in 2020.

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