Hong Kong stocks rise in dead cat bounce; China growth fears seen inflicting monthly loss
Hong Kong stocks rise in dead cat bounce; China growth fears seen inflicting monthly loss
Hong Kong stocks edged up on Friday after China more than doubled the duty-free shopping limits for mainland tourists to the city, spurring some optimism about reviving growth and consumption in the former British colony. Still, overall sentiment remained subdued, with the benchmark heading for its first monthly loss since January.
The Hang Seng Index gained 0.6 per cent to 17,815.07 at the noon break. Still the benchmark has lost 1.2 per cent to date in June and is set for its first monthly loss in five months. The Hang Seng Tech Index slipped 0.2 per cent and the Shanghai Composite Index rose 1 per cent.
Sentiment got a lift after China’s commerce ministry said the cap for duty-free shopping by mainland tourists entering Hong Kong and Macau would be raised to 12,000 yuan (US$1,651) from 5,000 yuan. The re relaxation is expected to bring additional consumption of as much as HK$17.6 billion (US$2.3 billion) to the city every year, according to the Hong Kong government.
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Online travel agency Trip.com Group gained 0.5 per cent to HK$375.20. Among other leading gainers, China Unicom advanced 4.5 per cent to HK$7.23 and BYD Electronic climbed 4 per cent to HK$39.25.
For the month, sentiment has been skittish as investors have been dumping stocks and flocking to government bonds for havens, amid lack of the conviction about a pickup in China economic recovery. The latest set of data showed a deceleration of profit growth for industrial companies, falling foreign direct investment and declines in home prices. Overseas investors have pulled out US$5 billion of Chinese onshore stocks in June, the largest monthly outflow since October, according to HSBC.
“As we have seen, most sectors haven’t had a noticeable improvement in earnings,” said Fan Jituo, an analyst at Cinda Securities. “For the next two months, the market will take a breather and trade sideways. For this to change, it calls for a pickup in earnings and inflows of fresh capital.”
Meanwhile, traders await data on US personal consumption expenditure due Friday night, a measure of inflation preferred by the US Federal Reserve. It probably increased 2.6 per cent from a year earlier in May, slowing from a 2.7 per cent increase for the previous month, according to the consensus estimate of economists tracked by Bloomberg.
Shares of three-quarters of the 82 members on the Hang Seng Index have retreated in June, with Xinyi Solar Holding, auto dealer Zhongsheng Group Holdings and JD Health International being the worst performers with declines of at least 18 per cent.
Three companies started trading on Friday. Laopu Gold, a jewellery retailer, jumped 63 per cent from its initial public offering price to HK$66.10 and Tianju Dihe Technology, a provider of application programming interface service, rallied 34 per cent to HK$111.60, while Dida, a ride-hailing platform operator, slumped 9.7 per cent to HK$5.42.
Other major Asian markets were broadly higher. Japan’s Nikkei 225 climbed 1 per cent in a breakout of a two-month rangebound pattern, while South Korea’s Kospi rose 0.1 per cent and Australia’s S&P/ASX 200 added 0.4 per cent.
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