Hong Kong Stocks rebound on firm Mainland cues

Headline shares of the Hong Kong market were closed higher after recouping early losses on Friday, 19 October 2018, as investors chased for bargain hunting on tracking rebound in Mainland A-shares today after Chinese regulators voiced support for the nation financial markets. However, market gains were modest amid concerns over U.S.-Saudi Arabia relations and fears of China's slowdown. At closing bell, the Hang Seng Index added 106.85 points or 0.42% to 25,561.40. The Hang Seng China Enterprises Index added 85.42 points or 0.84% to 10,222.18. The sub-index of the Hang Seng tracking the Commerce & Industry sector fell 0.3%, while properties sector added 0.5%, financial sector rose 0.9%, and Utilities sector added 0.7%. Turnover increased to HK$99.6 billion from HK$87.8 billion.

In a move to shore up investor sentiment ahead, the governor of the People's Bank of China said on Friday that China's current equity valuations are not in line with sound economic fundamentals, and that the bank will roll out targeted measures to help ease firms' financing problems and encourage commercial banks to boost lending to private firms.

 

China's securities regulator quoted its chief as saying it would encourage funds to help resolve liquidity difficulties at listed companies caused by stock pledging, and speed up approval for mergers and acquisitions as part of efforts to boost market confidence. Liu Shiyu, chairman of the China Securities Regulatory Commission (CSRC) also said the regulator will support the issuance of high-yield bonds and other debt products by small and medium-sized companies.

The comments from regulators came ahead of the release of China's GDP figures, which showed the economy grew 6.5% year-on-year in the third quarter, its weakest pace since the first quarter of 2009, amid a worsening trade war with the United States.

China released its GDP figures for the third quarter of 2018, which showed economic growth slowing to 6.5% year-over-year, compared to a 6.7-percent increase in the second quarter, data from the National Bureau of Statistics (NBS) showed Friday. For nine month ended September 2018, China's gross domestic product (GDP) expanded 6.7% year on year to about 65.09 trillion yuan (about 9.38 trillion U.S. dollars), the NBS said in a statement. The pace was in line with market expectations and higher than the government's annual growth target of around 6.5%.

The data Friday showed fixed-asset investment ticked up 5.4% on-year in the January-September period from record lows the year earlier when Beijing was reining in spending on bridges, railways, and highways. Retail sales, a window into Beijing's aim to get consumers spending to drive the economy, expanded 9.2% for the month compared with last year, from 9% in August.

Blue chips were mixed. HSBC (00005) slipped 1.1% to HK$63.85. HKEX (00388) bounced 3.1 % to HK$209, becoming the top blue-chip winner. AIA (01299) edged up 0.7% to HK$62.3. China Mobile (00941) softened 0.4% to HK$77.85.

Shares of Chinese lenders and insurers were higher after the jawboning of the People's Bank of China, the China Securities Regulatory Commission, China Banking and Insurance Regulatory Commission. CCB (00939) jumped 2% to HK$6.2. BOC (03988) added 1.6% to HK$3.28. NCI (01336) shot up 3.6% to HK$37.95. CPIC (02601) advanced 2.5% to HK$28.7.

Shares of Huarong-CMB network fell after independent stock commentator David Webb published new article, featuring the Huarong-CMB network, advised investors not to own 26 stocks involving the network. Huarong International Financial (00993) dipped 2.9% to HK$0.68. Huarong Investment (02277) dived 11.8% to HK$0.3. China Huarong Asset Management (02799) declined 0.7% to HK$1.44.

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