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Hong Kong stocks erased the day’s losses in late trading, with gambling companies and a supplier to Apple Inc. leading the advance.
The Hang Seng Index closed 0.2 percent higher, after falling as much as 0.9 percent. Galaxy Entertainment Group Ltd. was the biggest gainer, while phone-components maker AAC Technologies Holdings Inc. rose 1.3 percent. Postal Savings Bank of China Co. added 0.2 percent after a $7.4 billion initial public offering that was the world’s biggest since 2014. The Hang Seng China Enterprises Index and the Shanghai Composite Index slipped 0.3 percent each.
Hong Kong stocks have rallied this quarter, buoyed by mainland inflows via an exchange link with Shanghai and as traders scaled back bets for higher U.S. borrowing costs. A net 58.7 billion yuan ($8.8 billion) has flowed into Hong Kong equities through the connect this month, compared with 1.75 billion yuan in the other direction. That’s driven a valuation gap between dual-listed shares in Hong Kong and Chinese exchanges to near the narrowest since 2014.
"Net buying by mainland investors will probably continue in the fourth quarter due to demand for Hong Kong dollar-related assets to hedge against the yuan’s devaluation," said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co. "Northbound buying isn’t likely to pick up any time soon as there’s no good target to buy for overseas investors because of higher valuations."
The Hang Seng Index rose to 23,619.65, headed for a 2.8 percent advance this month. The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong retreated to 9,719.84. Mainland investors continued to be net buyers of Hong Kong stocks through the Shanghai link on Wednesday, while overseas investors sold mainland shares.
Today was the last chance for onshore investors to trade Hong Kong stocks through the connect until it reopens on Oct. 11. Northbound trading will be shut from Friday for the golden week holiday next week, and will reopen also on Oct. 11.
Trading was light on Wednesday, with China’s CSI 300 Index seeing volumes 52 percent lower than its 30-day average, according to data compiled by Bloomberg. Volumes on the Hang Seng Index were 19 percent reduced.
Galaxy rose 1.4 percent, while SJM Holdings Ltd. gained 3 percent. AAC Technologies, which sank 4.7 percent on Monday, rebounded for a second day.
— With assistance by Shidong Zhang, and Kana Nishizawa