Tencent, Shenhua jump as Hong Kong shares rise for third day
HONG KONG (NewsRise) -- Hong Kong shares headed for a third straight day of gains as expectations of earnings growth from Tencent Holdings and a special dividend from China Shenhua Energy helped fuel strong inflows from mainland investors.
The Hang Seng Index had added 0.6% to reach 24,447.91 by midday Monday, leaving it poised for a fresh 19-month high. Tencent, the biggest percentage mover of the 50-stock gauge, rose 2.2% ahead of the release of its annual results on Wednesday. Shenhua soared 16% to HK$19.10 in its biggest leap since 2008 after declaring a special dividend of 2.51 yuan (36 U.S. cents) a share on Friday when it reported a 41% increase in annual net profit.
The gains come on top of the Hang Seng Index's best weekly advance in six months after the U.S. Federal Reserve last week left its projection for its total number of interest rate increases this year at three. While the Fed raised borrowing costs by 25 basis points as widely expected, leading to a 10-basis point increase in China's interbank money market rates, reduced uncertainty over the Fed outlook and improving flows into Hong Kong from the mainland have since helped lift market sentiment.
Chinese investors in Shanghai and Shenzhen transacted about 6.4 billion Hong Kong dollars ($824.3 million) worth of local stocks Monday morning. Turnover on the Hong Kong bourse's main board reached nearly HK$56 billion.
"Market attention is now on the results announcements and this week the focus will be on Tencent, which is likely to report very good results," said Kenny Tang, chief executive officer at Jun Yang Securities. "A lot of funds have been coming from mainland China. There is speculation that mainland companies will pay very high dividends, and that's also helping sentiment."
The day's advances came despite weak cues from Wall Street on Friday when major U.S. indexes retreated. The Nikkei Asia300 Index was up 0.1% on Monday morning.
China Mobile rose 3.3% after reporting that it added about 6.4 million 4G mobile subscribers last month, boosting its customer base for the service to 558.6 million.
Meitu, developer of a smartphone app for enhancing user's appearance in selfie pictures, surged 14% and was among the most traded stocks in Hong Kong on Monday. The stock has more than doubled this month after being added to the list of companies that mainland investors can access through the Shenzhen-Hong Kong trading link.
Belle International Holdings slumped 4.4% after issuing a profit warning. The footwear major said it expects net income to drop by 15%-25% in the financial year that ended Feb. 28.
Cathay Pacific Airways slipped 0.9% after saying the European Commission would again seek to levy a fine of 57.1 million euros ($64.5 million), which was previously overturned in court, for alleged violations of European competition laws. The company said it is evaluating its legal options over the decision.
Several Chinese property developers also weakened, with China Overseas Land & Investment dropping 2.2% and China Vanke tumbling 4.3%. Authorities in Beijing have increased the down payment requirement on second home purchases in the city, according to a Reuters report. The government will control rapid flows of bank credit toward the property sector amid efforts to contain risks, the news agency reported, citing the head of the National Development and Reform Commission. Chinese new home prices rose again in February from a month earlier, according to National Bureau of Statistics data released over the weekend.
The Shanghai Composite Index inched up less than 0.1% on Monday, while the yuan traded onshore weakened less than 0.1% to 6.9035 against the dollar.
-- V. Phani Kumar