HONG KONG, Sept 10: Hong Kong shares held on to gains on Monday although investors paused for breath after last week’s sharp run-up as optimism over Chinese infrastructure spending was tempered by weak monthly trade data that pointed to a worsening economic outlook.
Imports shrunk while exports grew slower than forecast in August as China’s economy continues to face headwinds from a weak global environment as well as flagging domestic demand.
The Hang Seng index was up 0.1 percent by the midday trading break. The China Enterprises index of top locally listed mainland firms fell 0.2 percent.
In China, the CSI300 index of the top Shanghai and Shenzen listed stocks rose 0.6 percent. The Shanghai Composite was up 0.4 percent.
Mainland shares posted their best day in eight months last Friday on signs that Beijing is accelerating spending to boost growth. The CSI300 rose 5.1 percent on the week.
The European Central Bank’s decision to launch a new and potentially unlimited bond-buying programme also spurred sidelined investors back into the market lifting the Hong Kong benchmark up 3.1 percent on Friday.
‘What we’re seeing is relief after things have been bad for so long,’ said Larry Jiang, chief investment strategist at Guotai Junan in Hong Kong.
‘Europe is looking more stable at least for the moment and the China infrastructure news is helping although no one is asking where the money will come from. Meanwhile data keeps coming in below forecasts,’ said Jiang, referring to August’s weak trade data.
Beaten down Chinese machinery, cement and industrial stocks continued to rise helped by hopes of more infrastructure spending while secondary offerings and placements pulled banking shares lower.
Zoomlion Heavy Industry Science and Technology Co Ltd , which makes road construction and earth-moving equipment, rose 5.9 percent while Sany Heavy was up 4.4 percent. Sany shares in Shanghai rose 5 percent.
Shares of cement producer Anhui Conch rose 3.7 percent in healthy volumes while steel stocks such as Angang Steel and Maanshan Iron both rose more than 4 percent.
Chinese banking shares played spoilsport again with shares of China Construction Bank down 1.7 percent after an undisclosed investors sold a $530 million stake in the bank at a 2 percent discount to Friday’s close.
Shares of larger rival ICBC fell 2.3 percent. (agencies)
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