Hong Kong Market surges 2%

Hong Kong share market advanced on Monday, 27 August 2018, on tracking firm cues from global markets after Fed Chairman Jerome Powell reiterated the central bank's stance that further gradual increases in interest rates will likely be appropriate in view of strong growth in income and jobs. The gains were further propelled by the People's Bank of China announcement that it was tweaking its methodology for the fixing of the yuan's daily midpoint in an effort to stabilize the currency market. Around afternoon, the Hang Seng Index added 549.23 points or 2% to 28,221.10. The Hang Seng China Enterprises Index advanced 267.19 points or 2.5% to 11,046.90. The sub-index of the Hang Seng tracking the Commerce & Industry sector inclined 2.4%, the financial sector was 1.8% up, Utilities sector added 1.2%, and properties sector rose 2.2%.

Last Friday, speaking at a research symposium in Jackson Hole, Wyoming, where leading central bankers met to discuss the future of monetary policy, the U.S. Federal Reserve Chairman Jerome Powell said the Fed's gradual interest rate hikes were the best way to protect the economic recovery, maintain strong job growth and keep inflation under control.

The People's Bank of China (PBOC) said on Friday that it was adjusting the way it calculates the yuan's official midpoint to keep it more stable amid dollar strength and trade tensions between Washington and Beijing. The move to stabilize the yuan came a day after the latest Sino-U.S. talks aimed at resolving the trade war ended with little progress, with tougher U.S. measures expected to kick in next month that could add more pressure on the Chinese currency. It also comes as leaders try to temper trade tensions with the United States, with Donald Trump accusing Beijing of keeping the yuan artificially low to boost its exports and offset the impact of tariffs.

HK blue chips rose across the board. HSBC (00005) was up 0.7% to HK$69.9. HKEX (00388) added 2.3% to HK$226.6. Tencent (00700) gained 1.4% to HK$358.8. CCB (00939) rose 1.3% to HK$7. China Mobile (00941) also put on 1.4% to HK$73.9. AIA (01299) bounced 1.1% to HK$66.85.

Shares of Hong Kong listed Mainland lenders inclined ahead of earnings reports scheduled this week. China Merchants Bank (03968) soared 4.6% to HK$30.55 after it reported 14% interim net growth. China Construction Bank (00939), which reports earnings tomorrow, added 2.8% to HK$7.1. Agricultural Bank of China (01288) jumped 1.9% to HK$3.79. China Minsheng Banking (03988) rose 1.7% to HK$3.6. Industrial and Commercial Bank of China (01398) shot up 3% to HK$5.9.

Shares of automakers jumped on the bandwagon. PICC Property and Casualty (02328) rose 1.3% to HK$9.28. China Life Insurance (02628) added 1.4% to HK$18.66. Ping An Insurance (02318) bounced 3.2% to HK$76.15.

OFFSHORE MARKET NEWS, US stock market closed higher on Friday, following remarks by Federal Reserve Chairman Jerome Powell at the Kansas City Fed's economic policy symposium in Jackson Hole, Wyoming. Powell reiterated the Fed's stance that further gradual increases in interest rates will likely be appropriate if the strong growth in income and jobs continues. The Dow Jones Industrial Average rose 133.37 points or 0.5% to 25,790.35, the Nasdaq advanced 67.52 points or 0.9% to 7,945.98 and the S&P 500 climbed 17.71 points or 0.6% to 2,874.69.

The major European stock markets ended higher on Friday. The French CAC 40 Index, the German DAX Index and the U.K.'s FTSE 100 Index all rose by 0.2%.

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