Hong Kong stocks clinch best week in six months after Fed
HONG KONG (NewsRise) -- Hong Kong shares posted their steepest weekly advance since September as the Federal Reserve's members chose not to signal faster interest-rate increases and flows from mainland investors accelerated.
The Hang Seng Index ended the week 3.1% higher, rising for a second straight week. China Resources Land emerged as the top performer with an 8.9% increase over the five-day period to pace developers as investors looked past the Fed's 0.25 percentage point rate increase on Wednesday, focusing instead on expectations that U.S. borrowing costs will only increase gradually. The 50-stock gauge added 0.1% to 24,309.93 on Friday, trimming morning-session gains as fears about competitive price cuts weighed down Chinese automakers.
Geely Automobile Holdings plunged 10% and Great Wall Motor sank 8.9% in Hong Kong on speculation a sales promotion on sports utility vehicles by the latter would spark a competitive price war in the segment and hit industry profitability. The two were among the most actively traded in Hong Kong Friday, with more than HK$2.6 billion ($335 million) of shares changing hands in both counters. Friday's loss handed Geely a 5.7% weekly loss, the worst performer on the Hang Seng Index.
Turnover on the Hong Kong bourse's main board topped HK$121 billion, the highest level in at least several weeks. Mainland investors transacted more than HK$12 billion of local shares through the links with Shanghai and Shenzhen.
The Shanghai Composite Index fell 1%, recording its first decline in five days and paring a weekly advance to 0.8%. Castor Pang, head of research at Core Pacific-Yamaichi International, said investor sentiment toward Chinese shares "isn't bad" even after the People's Bank of China on Thursday raised the interest rates in interbank money markets by 0.10 percentage points as the central bank focuses on ensuring that liquidity is optimal.
"The central bank is worried that if liquidity is too loose, then it'll drive other asset markets such as property and create another bubble, that could hurt the overall Chinese economy in the long run," said Hong Kong-based Pang. He added that mainland equities were likely to trade in a range in the near-term, and that for Hong Kong-traded Chinese companies, "the upside depends on the A-shares."
Leshi Internet Information & Technology fell 1.1% in Shenzhen trading. Technology conglomerate LeEco, of which Leshi is a member, is looking to sell a parcel of land in Silicon Valley to ride out a cash crunch, Reuters reported Friday, citing sources.
China Unicom Hong Kong advanced 2.4% Friday, taking its weekly jump to 7.9%, on optimism a plan to slash its capital expenditure for this year would improve cash savings.
China Life Insurance jumped 6.8% to pace financial companies this week on expectations rising borrowing costs would improve its profitability. It rose 1% on Friday. Among lenders, China Construction Bank (CCB) added 0.3% Friday to take its weekly advance to 6.4%.
Casino shares were among the week's strong performers amid optimism over improving revenues from gaming and non-gaming operations in Macau. MGM China jumped 5.3% and Wynn Macau added 2.4% Friday, pushing their weekly gain to at least 6.9%. Sands China added 1% to HK$35.10 Friday after announcing a final dividend of HK$1. The stock added 3.8% during the week.
Samsonite International soared 9.2% on Friday, spurred by a rise in its 2016 net income, reported Thursday. TPV Technology surged 13% after swinging to an annual profit. United Co. Rusal added 2% after reporting a return to net profit on a recurring basis in the quarter ended Dec. 31.
Cathay Pacific Airways rose 1.4%, halting two days of declines, following reports it plans to cut staff costs by 30% at its Hong Kong headquarters. The airline reported a more than 17% jump in cargo and mail carried by the group in February, even as passengers carried declined 2.4%.
China Petroleum & Chemical (Sinopec) slipped 0.2%. The oil giant is nearing an agreement to buy a majority stake in Chevron's South African assets, estimated at $1 billion, Reuters reported, citing two people familiar with the transaction.
Kerry Properties closed 0.4% higher after reporting an 18% increase in 2016 net profit on Friday.
The Nikkei Asia300 Index added 0.8% to 1,167.63 and is up more than 4% for the week.
-- V. Phani Kumar
Information Technology Services