New | Hong Kong shares claw way to firm close after IMF verdict on yuan, but Chinese markets muted by finish
IMF decision may China market to join equity benchmark indices in long run
Hong Kong stocks were lifted to a strong close on Tuesday after China’s yuan was included in an elite reserve basket by the IMF, and analysts expected Chinese equity markets will likely benefit from the breakthrough in the long run.
The Hang Seng Index closed 1.94 per cent, or 427.17 points, higher at 22,423.59. The H-share Index, tracking mainland based companies, also rose 2.36 per cent, or 231.50 points to 10,022.14.
The mainland Chinese markets though traded nearly flat, as the yuan’s inclusion were well within investors’ expectation, while the official manufacturing data indicated the economy is still in a soft patch.
The Shanghai Composite Index added 0.32 per cent, or a meagre 10.90 points, to close at 3,456.31, with the CSI 300 up 0.71 per cent, or 25.28 points, to 3,591.70. The Shenzhen Composite Index shed 0.24 per cent, or 5.32 points, to 2,198.28. The Nasdaq-style ChiNext fell 0.64 per cent, 17.24 points, to 2,655.35.
Louis Tse Ming-Kwong, a Director at VC Brokerage, said the Hong Kong market seemed to take inspiration from news of the International Monetary Fund’s decision to add the yuan to its Special Drawing Rights reserve currency basket from October 2016, making it the fifth currency to join the pool alongside the US dollar, euro, Japanese yen and British pound.
“Although it is well expected, it is still positive news and will provide an excuse for traders to buy in the market and to wind up their short selling positions,” Tse said.
