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=ASIA MARKETS: Wall Street, Yuan Gains Lift Hong Kong Shares; Malaysia Slips

HONG KONG (Jan 11) -- Hong Kong shares headed for a sixth day higher on Friday, helped by an extended advance for the Chinese yuan against the dollar and another overnight increase on Wall Street.

The Hang Seng Index added 0.2% to 26,570.92 by noon. Heavyweights Tencent Holdings and AIA Group rose 0.9% and 1%, respectively. CSPC Pharmaceutical Group slipped 2.5% after a 7.6% surge on Thursday. The company said analyst reports saying management indicates a target guidance of 20% to 30% profit growth for 2019 “fairly reflect” its current view. The stock slumped 28.4% in 2018.

Other markets in the region were mixed, with the FTSE Bursa Malaysia slipping 0.1% to 1,676.75 and Singapore’s Straits Times Index adding 0.5% to 3,191.72. In the Philippines, the PSEi slid 1.6%, while Thailand’s SET Index rose 0.2%. The Nikkei Asia300 Index of regional companies rose 0.4%.

U.S. equity indexes completed their fifth consecutive day of gains on Thursday amid lingering optimism over a resolution to U.S.-China trade tensions and fading expectations of more rate increases by the Federal Reserve. A three-day trade meeting between U.S. and Chinese officials concluded in Beijing on Wednesday, with indications that talks were progressing well. Meanwhile, Fed Chairman Jerome Powell on Thursday reiterated that the central bank would be patient with future interest rate increases.

The market is still not very convinced about the “high possibility of a trade deal between the U.S. and China, but fund managers could not hold onto cash reserved for the year-start for too long,” said Jason Lee, vice president for stocks at Hong Kong consultancy Investment Strategy Institute.

They are “buying cautiously,” and prefer stocks with high asset quality such as AIA. The yuan’s sharp rebound in the last few days maybe have speeded up fund inflows, he said.

In the mainland, the yuan climbed 0.5% to 6.7524 against the dollar, heading for a third day higher. The currency is trading at its strongest levels since July 2018. The Shanghai Composite added 0.1%.

The yuan “has become a thermometer of China-U.S. relations. Now that both nations want a deal, the yuan is climbing and yuan-sensitive sectors are worth looking into.”

Chinese airlines, which bear fuel and aircraft acquisition costs in U.S. dollars, extended recent gains in Hong Kong, with Air China jumping 5.6% and China Southern Airlines climbing 4.9%. The two stocks are up 14.1% and 14.9%, respectively, for the week so far.

Cosmetics retailer Sa Sa International Holdings slumped 4.3% following a 2.2% decrease in third quarter retail and wholesale turnover to HK$2.19 billion ($279.3 million).

Fast Retailing jumped 6.4% even as the operator of Uniqlo clothing stores reported a 5.2% decline in November quarter profit. Revenue for the period rose 4.4% from a year ago.

Property management company Country Garden Services Holdings slid 10.5% to HK$11.54 after saying it agreed to place 168.76 million shares or 6.32% of enlarged share capital, at HK$11.61 per share, which is the lower end of earlier announced indicative range of HK$11.61 to HK$12.00 per share.

Kingsoft advanced 0.5%. The company said it is in contact with JD.com to discuss a possible business collaboration, but no concrete plan has been formulated.

GOME Retail Holdings advanced 1.5% after saying a proposed share consolidation plan would not proceed after 80.78% votes were cast against the plan in a special general meeting held on Thursday.

China Resources Power Holdings declined 0.9% after saying total net generation of subsidiary power plants in December fell 5% on-year.

Huadian Fuxin Energy added 1.1% after saying December’s gross power generation rose 5.6% from a year ago.

Huaneng Renewables advanced 0.5% following a 29.5% jump in gross power generation for last month.

Sinopec Engineering climbed 2.4% after forecasting an up to 50% increase in net profit for the year ended Dec. 31.

Engineering company Far East Global Group advanced 2.9% after saying new contracts grew 14.6% on-year to HK$4.79 billion for the year ended Dec. 31.

Skyfame Realty Holdings rose 0.9% following a 61.5% jump in sales for the year ended Dec. 31.

Printing services provider REF Holdings slumped 9.5% after saying it expects to report a “significant” fall in profit for the year ended Dec. 31.

In Kuala Lumpur, Malaysia Airports Holdings declined 2.4% despite reporting a 3.2% increase in December passenger traffic from a year ago. Property companies UOL Group and City Developments advanced 3% and 2.3%, respectively, in Singapore.

- By Amy Lam; amy.lam@nikkeinewsrise.com; +852 3960 5150
- Edited By Suzannah Benjamin
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