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Hong Kong - Chinese equities dropped, with weaker oil prices weighing on energy companies, as investors awaited data on the nation’s foreign-currency reserves to help gauge the outlook for the yuan.
The Shanghai Composite Index fell 0.4% to 3 145.41 at 08:08. Hong Kong’s Hang Seng Index dropped 0.1%, with China Petroleum & Chemical and PetroChina among the biggest decliners. The Hang Seng China Enterprises Index was little changed.
Oil posted its biggest daily loss in more than two weeks on Monday, with US crude stockpiles forecast to have grown by 2.5 million barrels last week, according to a Bloomberg survey of energy analysts.
Investors are eagerly awaiting the update on China’s reserves, with the country continuing to manage the yuan amid its bid to stem capital outflows. There is much focus on whether the stockpile will drop below the psychologically relevant $3trn level, with economists’ estimates ranging from $2.95trn to $3.03trn.
"The markets have been trading within a very narrow range and they may remain so, until there are clearer clues about the outlook for the yuan and there are more clarifications on US President Donald Trump’s policies," said Kenny Wen, strategist at Sun Hung Kai Financial in Hong Kong.
A gauge of 90-day volatility on the Hang Seng Index fell to the lowest level since November 2014 on Tuesday, while 90-day volatility on the Shanghai Composite Index was close to the lowest since 1992. Average daily turnover for Hong Kong’s securities market was HK$57.2bn in January, down from HK$82.2bn a year earlier, the Hong Kong stock exchange said in a statement on its website on Monday.
Chinese insurers extended their rally in Hong Kong, with China Life Insurance rising 1.1%, after they jumped on Monday amid speculation domestic pension funds are about to enter the stock market.
Gains were also stoked by the increase in China’s 10-year sovereign bond yield after the central bank raised the interest rates it charges in open-market operations and on funds lent via its Standing Lending Facility.
Guangdong Enpack Packaging, Shenzhen Kangtai Biological Products and Zhejiang Tuna Environmental Science & Technology climbed more than 40%, respectively, at their trading debuts on the mainland China Telecom, China Unicom (Hong Kong) rose more than 2% in Hong Kong after both were upgraded to buy from neutral at UBS NewOcean Energy surged as much as 79% in Hong Kong, the steepest intraday advance on record.
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