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Headline indices of the Hong Kong share market inclined on Wednesday, 25 July 2018, as risk appetite buying continued on tracking positive lead from Wall Street overnight and Chinese government pledges of a more vigorous fiscal policy. Most sectors gained ground, led by energy and services firms. Around afternoon, the Hang Seng Index rose 230.55 points or 0.8% to 28,893.12. The Hang Seng China Enterprises Index added 110.06 points or 1% to 11,083.98.

The State Council, the state cabinet, said on Monday it would adopt a “more proactive fiscal policy” and would speed up raising and spending 1.35 trillion yuan (about US$199 billion) for local government, designated to be spent on infrastructure. Beijing also injected 500 billion yuan (US$73.57 billion) into the banking system as it sought to aid a recovering yuan and the scandal-hit pharmaceutical sector.

China proactive fiscal policy measures will be taken to promote effective investment focusing on addressing inadequacies, gathering more momentum and improving people's livelihood, according to the State Council's executive meeting chaired by Premier Li Keqiang on Monday. Slowing economic growth has sparked a heated debate among government researchers on whether fiscal policy should play a bigger role in softening the impact of a trade war with the United States. The government will deliver a tax cut of 65 billion yuan (US$9.6 billion) by expanding a preferential policy for small technology firms to all firms, on top of an initial goal of cutting taxes and fees by 1.1 trillion yuan this year, the State Council said. The fiscal policy will focus on cutting taxes for companies while the pace of local governments' special bond issuance will be quickened, the statement said. Efforts will be stepped up in issuing 1.35 trillion yuan of special bonds for local governments to see more tangible progress on ongoing infrastructure projects. China will keep liquidity ample and maintain appropriate total social financing under its prudent monetary policy, which will be neither too tight nor too loose, it added. The government will step up efforts to ensure delivery of the State financing guarantee fund, targeting 140 billion yuan of loans for about 150,000 small and micro firms each year. The meeting also decided to deepen investment reform to solicit more private investment in fields including transportation, telecommunications, oil, and gas.

Shares of lenders climbed up on tracking gains on US peers. HSBC (00005) edged up 0.8% to HK$75.25. Standard Chartered (02888) jumped 3.2% to HK$72.5. Hang Seng Bank (00011) added 1.4% to HK$206.

Shares of handset components makers rebounded after digesting negative news. Sunny Optical (02382) put on 2.8% to HK$140.6. AAC Technologies (02018) shot up 3.7% to HK$101.6. FIT Hon Teng (06088) nudged up 0.3% to HK$3.47. Cowell e Holdings (01415) bounced 1.2% to HK$1.68.

Shares of energy players rose as China's demand for crude oil may increase. CNOOC (00883) jumped 2.1% to HK$12.7. PetroChina (00857) gained 2.5% to HK$5.76. Sinopec (00386) rose 2.8% to HK$7.41 after it issued positive profit alert.

OFFSHORE MARKET NEWS: The major U.S. stock indexes finished mostly higher Tuesday as investors welcomed strong corporate earnings reports from Google parent. The US government on Tuesday announced $12 billion in aid for farmers who have been the primary targets of retaliation by trading partners facing President Donald Trump's punishing tariffs. Alphabet and other companies. The S&P 500 index rose 13.42 points, or 0.5%, to 2,820.40. The Dow Jones Industrial Average gained 197.65 points, or 0.8%, to 25,241.94. The Nasdaq composite lost 1.11 points to 7,840.77.

The European markets ended solidly in positive territory on Tuesday, despite a survey that indicated economic growth across the 19-country eurozone moderated at the start of the third quarter. Germany's DAX rose 1.1% and the CAC 40 in France added 1%. The FTSE 100 index of leading British shares gained 0.7%.

 

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