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Thursday, November 10, 2016, 16:46

HK stocks spring back from rout

By Bloomberg
HK stocks spring back from rout
A full-page photo of US President-elect Donald Trump is splashed across the front page of the London Evening Standard in the financial district of the City of London on Wednesday. Hong Kong stocks joined their regional peers on Thursday in staging a strong rebound from Wednesday’s collapse in response to the upset victory of the Republican billionaire, as hopes of an economic stimulus from the incoming Trump administration allayed market fears and plugged panic selling. (Chris Ratcliffe / Bloomberg)

Hong Kong stocks tracked an about-turn in global markets on Thursday as investors looked beyond the shock of Donald Trump’s surprise victory to focus more on his plans to cut taxes and stimulate the economy.

The Hang Seng index rose 1.9%, to 22,839.11, while the China Enterprises Index gained 1.8%, to 9,545.85 points

The Hang Seng Index (HSI) jumped 1.9 percent — the most since May — after tumbling more than 2 percent in the previous session. China Shenhua Energy Co and Cnooc Ltd surged as the price of oil climbed back above $45 a barrel. The Shanghai Composite Index rose to a 10-month high, helped by Jiangxi Copper Co, amid a rally in metal prices.

Hong Kong shares joined their regional peers in all but erasing Wednesday’s losses as traders reassessed the implications of Trump’s win in the US presidential election. The development has clouded the outlook for a US Federal Reserve interest-rate increase amid speculation the Republican could ramp up fiscal stimulus, while also potentially pursuing a more pro-business agenda. Trump has signaled spending of more than $500 billion to rebuild US infrastructure and also pledged to lower taxes.

“It’s hard to make a directional bet as no one knows for sure what Trump will do,” said Hong Hao, chief strategist at Bocom International Holdings Co in Hong Kong. “Bets that are relatively certain include infrastructure projects, defense spending and unfriendly trade policy. Commodity stocks are jumping on such expectations.”

The HSI climbed to 22,839.11 while the Hang Seng China Enterprises Index jumped 1.8 percent — the most in more than five months. The Shanghai Composite surged 1.4 percent to extend its gains from a January low to more than 19 percent, setting it on course for a technical bull market.

The HSI oscillated more than 1,000 points on Wednesday — the most since Britain’s vote to leave the European Union triggered global market chaos in June. The Hong Kong gauge fell as much as 4.2 percent on Wednesday before paring some of the losses as Trump struck a conciliatory tone in his victory speech.

Thursday’s stock gains aside, Trump’s victory raises pressure on Chinese assets. The billionaire has branded the Asian nation a “grand master” at currency manipulation and said that it was stealing American jobs. He has threatened punitive tariffs of up to 45 percent on the country’s imports, a step that Commonwealth Bank of Australia estimated would cut China’s shipments to the US by 25 percent in the first year.

China Vanke Co rose 1 percent in Shenzhen after Wednesday’s 8.6-percent advance. China Evergrande Group bought 161.9 million Shenzhen-listed Vanke shares between Aug 16 and Wednesday, boosting its stake to 8.3 percent, Evergrande said in a filing to Hong Kong’s stock exchange after the close of trading on Wednesday.

China Shenhua Energy climbed 1.9 percent in Hong Kong, while Cnooc added 2.7 percent. All but three of the HSI’s 50 members rose for the day, almost a mirror image of Wednesday’s moves. HSBC Holdings Plc added 3.5 percent.

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