China H Shares Pare Losses as Oil Spike Lifts Energy Producers

  • Automakers, financial companies are among biggest decliners
  • Defense-related stocks rally in mainland Chinese markets

Chinese stocks in Hong Kong pared losses as energy producers climbed in the wake of a U.S. military strike against Syria.

The Hang Seng China Enterprises Index closed little changed, erasing an earlier loss of 1.3 percent. Automakers and financial companies were among the biggest decliners. PetroChina Co. rallied 2.3 percent as the attack on Syria pushed up crude prices. Jihua Group Corp. paced gains by defense-related shares on the Shanghai Composite Index, which added 0.2 percent.

The U.S. missile strike comes as President Donald Trump hosts Chinese President Xi Jinping at his Florida club. The two leaders were to discuss what to do about North Korea’s nuclear program and U.S.-China trade disagreements at a dinner Thursday. Hong Kong’s $4.4 trillion equity market is typically among the most vulnerable in Asia to external events due to the city’s position as an international financial center.

“Hong Kong is like a ATM for global investors when they want to move cash in reaction to a special event,” said Linus Yip, a strategist at First Shanghai Securities Ltd. “Hong Kong outperformed most other markets in Asia in the first quarter, so the attack acted as a trigger for some investors to take profit. Investors will be waiting to hear the tone of the meeting between Xi and Trump.”

The H-share gauge climbed 9.4 percent in the first quarter as inflows from mainland investors and an improving Chinese economy bolstered sentiment. The measure was little changed for the week, snapping two weeks of losses. The Hang Seng Index was little changed Friday, holding a 0.7 percent gain this week.

The attack early Friday in Syria was aimed at hangars, planes, fuel tanks, ammunition storage and air-defense systems at the Shayrat Airfield, according to the Pentagon.

  • Dongfeng Motor Group Co. led declines on the H-share measure, falling 2% to its lowest price since Feb. 17. New China Life Insurance Co. slipped 0.8% to its lowest since Jan. 4.
  • Jihua Group, a supplier of munitions to China’s army, rose 3.3%, the most since Dec. 26. Risk-off sentiment was prompting investors to pile into defense and gold-related stocks, said Shen Zhengyang, a strategist at Northeast Securities Co. in Shanghai.
  • Hefei Meiya Optoelectronic Technology Inc. jumped 4.4% in Shenzhen for its biggest surge since Nov. 7 after reporting net income rose 6.9% last year. The company proposed a cash dividend of 3 yuan for every 10 shares, according to a stock exchange statement.
  • MSCI Inc.’s latest proposal to include Chinese shares in its benchmark indexes is failing to convince market participants. Only 6 of 13 strategists and fund managers polled by Bloomberg said inclusion would go ahead this year.
  • Beijing Capital Co. climbed by the 10% daily limit for the third trading session since China announced Saturday it would develop an economic zone called Xiongan near Beijing.
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