Hong Kong Stocks extends gain on firm Mainland cues

Headline shares of the Hong Kong market were closed higher on Monday, 22 October 2018, as investors chased for bargain hunting on tracking sharp rally in Mainland A-shares today in the wake of coordinated statements of support for plunging equity markets by Chinese regulators, and as the Chinese authorities prepare to overhaul its income tax law for individuals. At closing bell, the Hang Seng Index added 591.75 points or 2.32% to 26,153.15. The Hang Seng China Enterprises Index added 268.49 points or 2.63% to 10,490.67. The sub-index of the Hang Seng tracking the Commerce & Industry sector added 2.6%, properties sector climbed up 2%, financial sector rose 2.4%, and Utilities sector added 0.7%.

Chinese Vice Premier Liu He, who oversees the economy and financial sector, joined the heads of the China Securities Regulatory Commission, the China Banking and Insurance Regulatory Commission, and the People's Bank of China in coordinated statements to rally investor confidence amid a bruising market slump. Over the weekend, President Xi Jinping vowed unwavering support for non-state firms, while the country's stock exchanges committed to help manage share-pledge risks. China's government on Saturday published its widely-expected plan to cut personal income taxes after data showed the nation's economy grew at the slowest pace since 2009.

 

On 19 October, the heads of PBOC, CSRC and CBIRC as well as Vice Premier Liu He collectively gave statements through press interviews that suggest a pro-active stance of the Chinese government to stabilize the domestic stock market and mitigate the risk of stock pledge loans. The MOF announced additional details on personal income tax cuts on 20 October 2018.

Blue chips were generally higher. Tencent (00700) gained 3.3% to HK$291.2. AIA (01299) bounced 3.8% to HK$64.65. China Mobile (00941) inched down 0.5% to HK$77.5. HSBC (00005) nudged up 0.8% to HK$64.35. HKEX (00388) rose 3.4% to HK$216.

Shares of HK listed Chinese lenders were higher following the rally of the mainland equity markets. CCB (00939) advanced 2.4% to HK$6.35. ICBC (01398) rose 2.5% to HK$5.36. China Life (02628) marched 3.4% to HK$17.82. Ping An (02318) ascended 3.3% to HK$76.5.

Shares of HK listed Mainland pharmaceutical counters saw strong buying interest. Sino Biopharmaceutical (01177) gained 10.6% to HK$7.39, becoming the top blue-chip winner. Sinopharm Group (01099) rose 2.2% to HK$36.8.

OFFSHORE MARKET: US stock market closed mixed on Friday, as concerns about rising interest rates and tensions between the U.S. and Saudi Arabia continued to weigh on the markets. The Dow Jones Industrial Average rose 64.89 points or 0.3% to 25,444.34, while the Nasdaq fell 36.11 points or 0.5% to 7,449.03 and the S&P 500 edged down 1.00 points to 2.767.78.

European markets also ended mixed on Friday. The German DAX Index dipped by 0.3% and the French CAC 40 Index fell by 0.6%, while the U.K.'s FTSE 100 Index rose by 0.3%.

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