China earnings optimism drives Hong Kong shares for fourth day
HONG KONG (NewsRise) -- Hong Kong shares headed for their fourth consecutive session higher Tuesday, spurred by gains in mainland companies ahead of a slew of earnings announcements.
The Hang Seng Index added 0.2% to 24,558.82 by midday after rising as much as 0.6% earlier. Henderson Land Development, due to report earnings Tuesday, gained 1.2%. Mainland property developers China Vanke, China Resources Land and China Overseas Land & Investment rose at least 1% despite reports of major Chinese cities tightening home purchase restrictions to stem speculative buying. The Hang Seng China Enterprises Index, a gauge of large mainland shares listed in the city, advanced 0.6%.
"We are seeing southbound flows" from the stock exchange links in Shanghai and Shenzhen, said Andrew Sullivan, managing director for sales trading at Haitong International Securities, adding that Western investors were underweight on mainland equities. "Also, there's a lot of hope that companies will increase their dividend payout, especially ones that are sitting on a lot of cash, like telecom and internet companies. Still, some telcos may wait to see what 5G rollouts will cost them."
China Mobile, which jumped nearly 3.7% Monday after saying it added 6.4 million new 4G subscribers last month, slipped 0.2% to HK$90.15. The mobile network operator, which started trials of 5G service last year, is due to report earnings this week.
China Telecom fell 0.5% to HK$3.80. During the midday break, the telecommunications major reported a 10% decline in 2016 net income to 18 billion yuan ($2.61 billion), matching estimates in a Reuters poll of analysts. It recommended a dividend payout of HK$0.105 a share.
Hengan International Group slid 1.3% to HK$66.65, before the diaper and feminine-hygiene products maker reported a 7.4% increase in last year's net profit to 3.47 billion yuan. The company proposed a final dividend of 1.1 yuan a share.
The Shanghai Composite Index and the Shenzhen equity benchmark each eked out a 0.2% advance. The yuan traded offshore was little changed at 6.906 against the dollar.
China Shenhua Energy fell 0.8% in Hong Kong after jumping 16% Monday following the announcement of a special dividend and robust earnings.
The city's developers Sino Land, Hang Lung Properties and Cheung Kong Property Holdings extended gains, adding at least 0.4% after Chicago Federal Reserve President Charles Evans affirmed the central bank's intention to raise interest rates only twice more this year. Borrowing costs in Hong Kong move in lock-step with U.S. rates because of the city's currency peg to the dollar. Other Asian markets also continued to bask in the Fed's less hawkish-than-anticipated outlook, with the Nikkei Asia300 Index rising 0.7% to 1,179.61.
Investors continue to watch for cues from the U.S. economy and the Federal Reserve, especially divergent views from various policymakers, Sullivan said.
Also reporting annual results at the end of the morning trading session, property developer K. Wah International Holdings said its profit attributable to shareholders more than doubled to last year to HK$3.18 billion ($409.5 million). The stock was up 0.4% by noon.
Poly Property Group reported a net profit of HK$80.7 million for the year ended Dec. 31, following a loss in the year before. The stock added 0.9%.
Four Seas Mercantile rose 3.4% after it said late Monday it agreed to sell a parcel of land and buildings in Hong Kong for HK$368 million. The company expects a gain of about HK$320 million from the sale.
Citic Telecom International Holdings, a unit of Citic, plans to continue looking for opportunities to buy foreign companies and form partnerships, Chairman Xin Yuejiang reportedly said at a press conference Monday. Its shares slid 3.5%.
Want Want China Holdings rose 1.2%. Fitch Ratings on Monday said it expects the snack maker's strong cash flows and limited capital expenditure needs to help maintain a strong financial position, despite reporting an 8% decline in 2016 revenue.
--V. Phani Kumar