Hong Kong Market snaps three-day winning streak

Headline indices of the Hong Kong stock market finished session lower on Monday, 16 December 2019, snapping three-day winning streak, as better-than-expected China economic data and U.S.-China trade pact failed to allay investors' concerns about the city's frail economy, which continues to be shaken by unrelenting protests. At closing bell, the benchmark Hang Seng Index declined 0.65%, or 179.67 points, to 27,508.09. The Hang Seng China Enterprises Index shed 0.55%, or 59.22 points, to 10,778.89.

The sentiment in the Hong Kong market is still weighed down by the dire state of the economy. The weekend's vandalism and arson in a few districts in Hong Kong continued to worry traders about when the city's economic contraction from the half-year long anti-government protests will bottom out. The government has already forecast a 1.3 per cent full year contraction for 2019.

Industrial production, which measures China's industrial output, including manufacturing, mining and utilities, grew by 6.2% in November, up from October's 4.7%. Meanwhile, retail sales grew by 8.0% in November, up from 7.2% a month ago.

The United States and China have reached an historic and enforceable agreement on a Phase One trade deal that requires structural reforms and other changes to China's economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange. The "Phase 1" agreement means that the U.S. won't impose new tariffs on Chinese goods that had been scheduled for Sunday. As part of the deal, the United States will maintain 25% tariffs on $250 billion of Chinese imports while halving tariffs on $120 billion in products to 7.5%.In return, Trump said that the Chinese have agreed to "massive" purchases of American farm and manufactured products as part of the initial deal. The president said a so-called phase-two deal will be discussed immediately rather than after the 2020 presidential election. The two major economies plan to sign the partial accord in the first week of January.

The long-awaited deal could dial down tensions between the United States and China and provide some relief to investors, who have been buffeted for months by worries that a full-blown trade war would pressure global economic growth.

Meanwhile, U.K. Prime Minister Johnson's Conservative Party swept to a landslide victory in elections on Thursday, securing a strong majority in Parliament. The convincing win gives him support to secure a Brexit deal and negotiate a new relationship with the European Union next year. Brexit concerns have been cited as one lingering headwind for global investors.

Blue chips were mixed. HSBC (00005) fell 0.6% to HK$60. HKEX (00388) slipped 1.2% to HK$252.4. Tencent (00700) edged down 0.3% to HK$359.8. China Mobile (00941) nudged up 0.2% to HK$61.7. AIA (01299) slid 2% to HK$81.

Property stocks declined after news flow from Sun Hung Kai properties, whose revenue at its hotels division had plummeted by up to half in November and December, as the city's tourism industry struggled to stay afloat amid seven months of anti-government protests and the US-China trade war. Link Reit (823 HK) lost 1.4 per cent to HK$79.4, Sun Hung Kai Properties (16 HK) dropped 1.1 per cent to HK$117, and Swire Pacific (19 HK) lost 1.4 per cent to HK$72.3.

Macau gaming counters were mostly higher after Chinese President Xi Jinping is scheduled to visit Macau during 18-20 December. Wynn Macau (01128) gained 1.5% to HK$18.54. Galaxy Entertainment (00027) put on 1% to HK$58.55. Melco International (00200) bounced 3.5% to HK$21. SJM Holdings (00880) advanced 1.2% to HK$8.91. Sands China (01928) inched up 0.3% to HK$39.75. But MGM China (02282) fell 0.9% to HK$12.88.

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