HK stocks close up as southbound inflows hit three-week high
SHANGHAI: Hong Kong shares ended higher on Monday, lifted by the strongest southbound inflows via the Stock Connect in three weeks, even as investors remained cautious over the outlook for tighter cash conditions in the market. China stocks were also up.
China's blue-chip CSI300 Index closed up 0.3%, while the Shanghai Composite Index gained 0.7%. Hong Kong benchmark Hang Seng was up 0.7%.
Onshore investors bought a net 7.9 billion yuan ($1.11 billion) of Hong Kong shares via the Stock Connect on Monday, the highest since May 30.
Mainland investors helped drive a rally in Hong Kong shares earlier this year, but their participation has tapered off in the past two months.
Hua Hong Semiconductor and SMIC jumped around 4.5% each, after media reported that the US government is weighing additional restrictions on China, including revoking waivers that allow global chip makers to access American technology in China.
Meanwhile, the Hong Kong dollar slipped to 7.85 per US dollar on Monday, hitting the weaker end of its trading band for the second time since May 2023. The move may prompt the Hong Kong Monetary Authority to drain liquidity from the banking system to support the currency.
Hong Kong market liquidity is unlikely to ease further and may even tighten as Hong Kong Interbank Offered Rates (HIBOR) have likely bottomed out and southbound inflows have slowed, said Kevin Liu, strategist at China International Capital Corporation (CICC).
The overnight HIBOR, a key barometer of liquidity, hovered near a record low at 0.01777%.
'Short-term liquidity tightening, uncertainties surrounding tariff negotiations, weakening economic data, and delays in policy support could all contribute to increased market volatility,' Liu said. China's Coal Index rose 1.6%.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
3 days ago
- Business Recorder
China shares set for best week in seven months on financials boost, Mideast truce
SHANGHAI: China stocks were little changed on Friday but were set to notch their biggest weekly gain in more than seven months, led by financial shares, as a ceasefire between Israel and Iran lifted investor sentiment. China's blue-chip CSI 300 Index was flat by the lunch break, while the Shanghai Composite Index lost 0.2%. Hong Kong benchmark Hang Seng was down 0.1%. Chinese brokerage stocks rallied sharply this week, buoyed by easing global geopolitical tensions and improved investor risk appetite, Morgan Stanley analysts said in a note. Over a 6- to 12-month horizon, increased portfolio allocation to China appears likely, supported by improving market fundamentals and growing global investor demand for diversification, they said. Tianfeng Securities jumped 10% on Friday. The CSI 300 Index has risen 2.6% this week, on track for its strongest weekly gain since November 2024, while the Hang Seng Index advanced 3.3%, heading for its best week since March. Onshore financial shares climbed nearly 4% this week. China stocks retreat 7-month high following Mideast calm China's industrial profits swung back into sharp decline in May from a year earlier, as factory activity slowed in the face of broader economic stress. The United States has reached an agreement with China on how to expedite rare earth shipments to the U.S., a White House official said on Thursday, amid efforts to end a trade war between the world's biggest economies. Shares of Xiaomi surged to a record high on Friday, after the company launched a new electric car model with a strong beat on pre-orders. But this has added pressure on other auto makers, with Li Auto and Xpeng down 1.4% and 2.7%, respectively. Hong Kong's HSCI Materials Index and mainland's Non-Ferrous Metals Index rose 2.5% and 2.4%, respectively, as non-ferrous metal prices such as copper broadly rallied.
Business Recorder
4 days ago
- Business Recorder
Facing global headwinds, Chinese automakers make a play for Africa
JOHANNESBURG: Chinese automakers are pushing to unlock Africa's underdeveloped potential, with a focus on electric and hybrid vehicles, as restrictions on exports to the United States and Europe send them on a global quest for new markets. Though home to over a billion people, low incomes and high import duties have long hampered manufacturers' efforts to sell more cars in Africa. Unreliable power availability and a lack of charging infrastructure have meanwhile held back EV uptake. But companies including BYD, Chery Auto and Great Wall Motor (GWM) are aiming to leverage low prices to advance where others have struggled and use an expansion in South Africa as a stepping stone in a continent-wide strategy. 'We treat South Africa as a very important market for our global expansion,' said Tony Liu, the CEO of Chery South Africa, calling Africa's most developed auto market a 'gateway to the African continent.' Nearly half of the 14 Chinese automotive brands currently active in South Africa launched only last year. More, including DongFeng, Leapmotor, Dayun and Changan, are set to enter the market soon. And as new players move in, more established companies are looking into producing cars locally, allowing them to benefit from a government incentive programme offering rebates for domestically made vehicles. Dude, where's my car? Toyota buyers face long waits amid hybrid boom Liu said Chery - the number 2 Chinese auto company in South Africa - was considering partnerships or building its own factory to produce cars for the South African market and export to the rest of the continent and potentially Europe. Omoda & Jaecoo - Chery's premium independent brand - is also conducting feasibility studies for local assembly, its South Africa general manager Hans Greyling told Reuters. Until now, it had not made sense for GWM, the largest Chinese automaker in South Africa by sales, to localize component production, its chief operating officer Conrad Groenewald told Reuters, as Chinese imports had been cheaper. That is changing, however, and outsourcing to a local manufacturer or setting up a semi-knockdown plant, which would turn partially pre-assembled kits into finished vehicles, were options. 'I think now that we've got economies of scale … We need to revisit those feasibility studies in the next 12 months,' he said. Troubles with Europe and the US Chinese carmakers, which are in the midst of a rapid switch to EVs and hybrid production, are facing growing obstacles in the U.S. and Europe. Growth of new EV sales has been slower than expected in many wealthy markets. And the EU's hefty duties on imports of Chinese-made EVs and 100% tariffs in the United States have erased their primary competitive advantage: price. Efforts to push into large emerging markets like India and Brazil have also proven to be complicated. While the African market is still comparatively tiny, industry sources point to massive potential for growth. South Africa, a market long dominated by the likes of Volkswagen and Toyota, manufactured just under 600,000 cars last year. But the government estimates production could grow to up to 1.5 million by 2035 given the right incentives. The former head of the Association of African Automotive Manufacturers once estimated Sub-Saharan Africa's potential market at between 3 and 4 million new car sales annually. Chinese companies stand poised to test that potential. Chery is launching sales of eight hybrid cars, including five extended-range plug-in hybrids and three hybrid models, in South Africa. It will also introduce two small crossovers, while a pickup truck is scheduled to go on sale next year. It also plans to bring its EV line iCar and another brand, Lepas, to South Africa in the near future, Liu said. BYD, China's top producer of electric and plug-in hybrid vehicles, entered the South African market in 2023. It recently doubled its South Africa line-up, adding the plug-in hybrid Shark pickup truck, plug-in hybrid SEALION 6 crossover and fully electric SEALION 7 SUV models to a range that had previously only included battery-powered models. Hybrids and a Pan-African push Auto executives interviewed by Reuters view plug-in hybrids as critical to their Africa strategy. 'Battery electric vehicles have not really taken off in South Africa,' Omoda & Jaecoo's Greyling said. 'We've gone the route of looking more towards traditional hybrids or plug-in hybrids.' South African sales of so-called new energy vehicles – a class including traditional and plug-in hybrids along with EVs - more than doubled from 2023 to last year, accounting for 3% share of total new vehicle sales. While the numbers may still be small - 15,611 vehicles, mainly traditional hybrids - Chinese companies are encouraged by the trend. 'Based on our experience in China, once the market share of new energy vehicles reaches almost 10%, then the demand will start to explode,' Chery's Liu said. Chinese automakers face consumer skepticism over quality, spare parts availability and the untested resale value of their vehicles. But they are counting on price and advanced technology setting them apart from Africa's traditional market leaders and are focusing on offering plug-in hybrids and EVs with a starting price of under 400,000 rand ($22,500). 'As long as they remain affordable from an up-front cost perspective, they will be differentiated against legacy brands offering similar specifications,' said Greg Cress of advisory firm Accenture. Omoda & Jaecoo, which launched in Africa in 2023 and operates 52 dealerships in South Africa, Namibia, Eswatini and Botswana, hopes to triple sales in the next 18 months and enter new markets Zambia and Tanzania. BYD plans to expand its dealership network in East, Southern and West Africa, including a first-time entry into Tanzania. Steve Chang, BYD Auto South Africa's general manager, said he is not daunted by the slow adoption of EVs and Africa's internal combustion engine-dominated vehicles market. 'I think South Africa and the rest of Africa have a very big opportunity to what I call leapfrog from ICE into renewable energy (cars),' he said. 'Africa is a very big market.'
Business Recorder
4 days ago
- Business Recorder
China stocks closes at six-month high as ME truce lifts sentiment
SHANGHAI: Shanghai stocks closed at a more-than-six-month high on Wednesday, while Hong Kong ended at its loftiest since March, boosted by a ceasefire between Israel and Iran, as well as some hopes of an earlier-than-expected US Federal Reserve rate cut. The ceasefire brokered by US President Donald Trump between Iran and Israel appeared to be holding on Wednesday, a day after both countries signalled that their air war had ended, at least for now. 'Tensions between Iran-Israel will be eyed as financial markets remain hopeful that a delicate ceasefire between the two nations would hold,' analysts at UOB said in a note. At the close, the Shanghai Composite index was up 1.04% at 3,455.97 points, the highest close since December 12, 2024. The blue-chip CSI300 index was up 1.44% at 3,960.07 points, the highest closing level since March 20. The smaller Shenzhen index ended up 1.41% and the start-up board ChiNext Composite index was higher by 3.113%. Brokerage shares led the gains, with CSI securities sub-index rallying 5.48%. Defence shares were also among top winners, with the sub-index jumping 3.68%. Meanwhile, China's Premier Li Qiang said on Wednesday that he was confident the country could maintain a 'relatively rapid growth rate' and transition from a manufacturing-led economy to a consumer-driven one. In Hong Kong, the Hang Seng index was up 1.23% at 24,474.67 points, the highest closing level since March 19. The Hang Seng China Enterprises index rose 1.13% to 8,859.29 points. Separately, Fed Chair Jerome Powell said on Tuesday that higher tariffs could begin raising inflation this summer, a period that will be key to the US central bank considering possible interest rate cuts. 'While Powell reiterated the message that Fed need not rush to cut, he did suggest that the Fed may cut rates sooner rather than later if inflation pressures remain contained,' OCBC analysts said in a note. 'But he was careful in not committing to a timeline.' Fed rate cuts could aid Hong Kong stocks as they are closely tied to global monetary policy shifts.
