China shares climb on improved trade sentiment, while Hong Kong stocks weighed down by protests
- Shanghai Composite Index rises 1.3 per cent, while tech heavy ChiNext jumps 2.6 per cent
- In Hong Kong, shares of MTR sank, leaving it down 21 per cent from its July 18 high
China shares posted solid gains on Monday as sentiment improved on the trade war front and on expectations of more policy support ahead.
Hong Kong stocks, however, were weighed down as another weekend riot hit listed retailers and MTR, the owner and operator of the city’s subway system, which was vandalised. MTR closed down 3.1 per cent, at HK$44, which was 21 per cent off from its July 18 high.
The benchmark Shanghai Composite Index added 1.3 per cent to close at 2,924.1, bolstered by shares in the aviation, technology development, media and communications sectors.
The Nasdaq style ChiNext index shot up by 2.6 per cent to 1,652.3, with 29 companies hitting their daily 10 per cent limit.
The Shenzhen Component Index rose 2.2 per cent to 9,569.5.
Mainland investors are not worried about the relationship between the world’s two biggest economies because trade talks are still going on and making progress, associate director of Eddid Securities and Futures Ryan Chan said.
“Investors understand that although both sides are showing a tough and adamant stance, it is only a strategy and attitude for negotiations,” said the analyst.
Despite the escalation of the trade dispute, Trump told reporters on Saturday that “as of now” the face-to-face talks scheduled to take place in Washington later this month were still on.
China has yet to confirm the details. But the commerce ministry in Beijing said the two sides were “still discussing” whether a Beijing delegation would travel to the US capital.
On the other hand, a stronger-than-expected reading of the Caixin PMI also bolstered trading sentiment on Monday. The number for August bounced back to expansion territory, at 50.4, after hovering in the contraction territory (below 50) in June and July. It is also the highest since April, indicating a slight improvement of manufacturing sentiment.
“Front loading of exports to the US ahead of higher tariffs has supported trade and overall activity growth in the first couple of months this year. However, this effect is expected to fade in the months ahead,” said Stephen Innes, APAC market strategist with AxiTrader in Singapore.
In Hong Kong, however, the market was stung by a new round of protests that disrupted operations at the airport and the MTR. The MTR shut down the Tung Chung line on Sunday.
Cathay Pacific, the city’s biggest carrier that has been dragged into protest fallout, closed 0.4 per cent lower to HK$10.2.
Retailers and manufacturers of jewellery, watches and clocks, restaurants and hotels also continued their losing streak.
Chow Sang Sang Holdings International, the retailer and manufacturer of gold and gem-set jewellery products, slid by 1.4 per cent to HK$8.8. The company has lost 26 per cent from a recent high at HK$11.9 in mid July.
Of other stocks, Guangzhou Automobile Group tumbled 5.6 per cent to HK$7.5 as Nomura cut the target price to HK$10 from HK$11.5, citing bearish earnings-per-share outlook.
Yanzhou Coal Mining surged by 18.7 per cent to HK$8.1. The company reported a net profit jump of 23.5 per cent year on year to 5.4 billion yuan, and announced it will distribute an interim dividend of 1 yuan per share on Friday night.
Its Shanghai listed shares also hit the daily limit up by 10 per cent to close at 10.5 yuan.
Additional reporting by Deb Price and Holly Chik
