Hong Kong shares face pressure of weak data, trade woes

Hong Kong shares were little changed on Monday as China reported a weak industrial profit, but the forthcoming trade talks between Beijing and Washington and a leadership change at China's stock market regulator gave some hopes. The Hang Seng index ended nearly flat at 27,576.96, while the Hang Seng China Enterprises index inched up 0.1 per cent.

Earnings at China's industrial firms shrank for a second straight month in December, data showed on Monday, putting pressure on policymakers to support industries hurt by slowing prices and weak factory activity amid a protracted trade war with the United States. Over the weekend, China appointed banking veteran Yi Huiman to head the China Securities Regulatory Commission.

All eyes are now set on Chinese Vice Premier Liu He's visit to the United States on Jan. 30-31 for the next round of trade negotiations with Washington. The sub-index of the Hang Seng tracking energy shares rose 0.1 per cent, while the IT sector dipped 0.7 per cent; the financial sector ended 0.3 per cent higher and the property sector rose 0.1 per cent.

The top gainer on the Hang Seng was Hengan International Group Company Ltd, which rose 1.9 per cent, while the biggest loser was CSPC Pharmaceutical Group Ltd, which fell 4.1 per cent. The interest rate-sensitive Hong Kong market will also pay attention to the first Federal Open Market Committee meeting of 2019 at the U.S. Federal Reserve, taking place on Jan. 29-30.

Around the region, MSCI's Asia ex-Japan stock index was down 0.02 per cent, while Japan's Nikkei index closed down 0.6 per cent. The top gainers among H-shares were ZhongAn Online P & C Insurance Co Ltd up 2.7 per cent, followed by New China Life Insurance Co Ltd, gaining 2.5 per cent and Anhui Conch Cement Co Ltd, up by 2.1 per cent. The three biggest H-shares percentage decliners were China Tower Corp Ltd, which was down 4.6 per cent, China Gas Holdings Ltd and CSPC Pharmaceutical Group Ltd, both down by 4.1 per cent.

About 1.76 billion Hang Seng index shares were traded. The volume traded in the previous trading session was 2.34 billion. China's A-shares traded at a premium of 16.80 per cent over the Hong Kong-listed H-shares. The short and one-factor leveraged Hang Seng index, which is designed to replicate the payoff of a short or leveraged portfolio and is linked to the movements of the Hang Seng Index, was lower by 0.02 per cent on the day at 5,011.62.