China stocks up on stronger 4Q GDP growth; HK down, all eyes on Trump

SHANGHAI: China stocks rebounded yesterday morning as data showing stronger-thanexpected fourth quarter GDP growth bolstered blue- chips, while bargain hunting helped small- caps recover much of the losses suffered earlier in the week.

But underlying caution prevailed ahead of Donald Trump’s inauguration as the 45th US president later in the day, reflecting worries about the new US administration’s potentially detrimental China policy – a concern that dented Hong Kong shares.

The blue- chip CSI300 index rose 0.7 per cent, to 3,352.25 points at the end of the morning session, which would mean a weekly loss of roughly 1 per cent.

The Shanghai Composite Index gained 0.5 per cent, to 3,118.03 points.

At the end of a volatile week, market sentiment improved after China reported economic growth of 6.8 per cent in the fourth quarter, exceeding market expectations.

The data raised expectations of solid corporate results as markets also look to looming earnings season.

Still, some analysts were wary of the headwinds in a Trump-led White House, potentially sparking trade friction with China during his term.

“The key risk is Trump’s trade policy. The external risk of China is obviously heightened, at the same time how Fed will move policy rates in the US,” said Raymond Yeung, chief economist of Greater China for ANZ in Hong Kong.

That view was echoed by Zhang Qi, analyst at Haitong Securities, who said companies in eastern China will likely face greater pressure on exports if Trump carries through with his protectionist policies.

All sector in the mainland market made modest gains by the lunch break, with consumer discretionary stocks among the best performers, with an index tracking the sector up around 1.3 per cent.

China’s start- up tech-heavy ChiNext rebounded strongly, up 2.5 per cent as recent sharp falls attracted bargain hunting.

In Hong Kong, the benchmark Hang Seng index dropped 0.6 per cent, to 22,907.86 points, while the Hong Kong China Enterprises Index lost 0.6 per cent, to 9,734.38 points.

The benchmark index has lost 0.1 per cent so far this week, threatening to snap a three-week winning streak if losses aren’t pared in the afternoon.

Interest- sensitive stocks including property developers and utilities firms retreated around 0.7 per cent at midday, after Federal Reserve Chair Janet Yellen said that the US central bank should continue to raise interest rates slowly to keep jobs plentiful and inflation low.

The city’s interest rates usually follow the United States, thanks to a currency peg to the greenback.

Energy sector extended Thursday’s losses and fell more than 1.2 per cent, partially dragged by index heavyweight PetroChina Co Ltd and CNOOC Ltd. — Reuters