Hong Kong Stocks close higher as derivative trading resumes

The Hong Kong share market closed higher on Friday, 06 September 2019, as derivative trading resumes on the city's exchange resumed after a software bug triggered a half-day suspension a day earlier, with volumes of the futures contracts on the Hang Seng gauge spiking. Meanwhile, buying momentum was also supported by tracking a strong session on Wall Street overnight after a slew of data reinforced confidence in the American economy and hopes for reduced tensions after Washington and Beijing agreed to hold high-level trade talks next month. Market gains were, however, limited in the afternoon trade after Fitch Ratings downgraded Hong Kong's rating to 'AA' from 'AA+', with a negative outlook. At closing bell, the Hang Seng Index advanced 0.66%, or 175.23 points, to 26,690.76. The Hang Seng China Enterprises Index was up 0.45%, or 46.53 points, to 10,430.67. for the week, the Hang Seng index gained 3.8%.

U.S. markets rose to their highest levels since the end of July during the trading day on Thursday after news emerged that the U.S. and China planned to hold negotiations in October. Markets in the U.S. were also spurred by data showing that private payrolls grew higher than the expected 195,000 in August. The Dow Jones Industrial Average soared 272.68 points or 1.41% while the S&P gained 38.22 or 1.3% and the Nasdaq jumped 139.95 or 1.75%.

Trade developments hopes between the world's two biggest economies have spurred after China confirmed a new round of high-level trade talks in Washington set for early October. The impending talks rekindled hopes for progress after the two countries recently escalated tensions with fresh tariffs.

China announced the 13th round of high-level talks in its official media Thursday following a phone conversation between Chinese Vice Premier Liu He and U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin. A statement issued by the Ministry of Commerce said the two sides agreed to take concrete action to promote favorable conditions for the talks and pledged to keep in close contact. Working teams were expected to begin negotiations in mid-September in advance of the October session.

China will implement both broad and targeted cuts in the reserve requirement ratio for banks "in a timely manner," China's cabinet said in a meeting on Wednesday, an indication that a cut in the key ratio aimed at boosting lending could be imminent.

Among the 50 blue chips, 38 rose and 10 fell, with two stocks remaining steady. Blue chips were mostly firmer. HSBC (00005) added 1% to HK$58.05. HKEX (00388) put on 0.9% to HK$249.4. Tencent (00700) nudged up 0.6% to HK$343.4. China Mobile (00941) nudged up 0.1% to HK$66.1. AIA (01299) rose 1.5% to HK$79.7.

Smartphone component suppliers rose across the board on abated US-China trade tension. Sunny Optical (02382) added 2.7% to HK$116.4. AAC Technologies (02018) rose 2.9% to HK$40.25 after yesterday's rally of 12%. Q Technology (01478) surged 9.7% to HK$8.49. BYD Electronic (00285) gained 1.3% to HK$10.68. FIT Hon Teng (06088) marched 2.3% to HK$3.63. Truly International (00732) advanced 1% to HK$1.04. Tongda Group (00698) was unchanged at HK$0.6.

China property manager A-Living (3319 HK) shot up 8.3 per cent to HK$17.30, hitting an all-time high. A-Living announced it "has commenced a preliminary negotiation" with an independent third party about possible acquisition of a stake in CMIG Futurelife Property Management, which is a private investment group in China.

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