China GDP data fuels stimulus hopes, lifts Hong Kong shares

Hong Kong shares rose for a second day on Monday, as Chinese companies climbed amid hopes that mainland authorities will provide more stimulus after the nation's economic growth cooled in the fourth quarter.

The Hang Seng Index climbed 0.4% to 27,196.54 following a 1.6% advance last week. Internet heavyweight Tencent Holdings added 0.9%, contributing most to the gauge's gains by points, while mainland lenders China Construction Bank and Industrial & Commercial Bank of China rose 0.9% and 1.4%, respectively.

Mobile operator China Unicom (Hong Kong) edged 0.2% higher after slipping as much as 1.2% earlier. The company added a net of 2.03 million mobile billing subscribers in December, bringing the aggregate number to 315.04 million. In December 2017, China Unicom added 2.82 million mobile billing subscribers.The Hang Seng China Enterprises Index for large mainland companies listed in the city advanced 0.7%, while the Shanghai Composite Index rose 0.6% in the mainland. Data released on Monday showed China's gross domestic product for the October-December period came in at 6.4%, compared with a pace of 6.5% for the quarter ended Sept. 30 but matching estimates compiled by Reuters. The slowdown follows an unexpected decline in China's December trade numbers.

"People continue to anticipate that China's central government will do more to support economic growth," said Castor Pang, head of research at Core Pacific-Yamaichi International.

J.P. Morgan on Monday trimmed its growth forecast for the January-March quarter to 5.9% from 6.1% following the GDP numbers, but raised its outlook for the second and third quarters.

The brokerage expects more economic stimulus from China. "While policy easing is broadly in line with our expectations, the magnitude and pace are supportive of a recovery that may start in the second quarter," the analysts added.

On Friday, China's National Development & Reform Commission, the Ministry of Commerce and State Administration for Market Regulation held a joint news conference in Beijing, focusing on boosting consumption, including encouraging spending on automobiles and home appliances.

Pang, however, said he does not expect China to roll out "aggressive consumption subsidies" this year, but rather to just encourage spending through tax cuts, which will have "a very slow stimulative effect on consumption."

Separately, data on Monday showed China's retail sales for December rose 8.2%, also matching expectations. Industrial output rose 5.7% last month, better than the 5.3% growth expected by analysts in a Reuters poll. The yuan traded onshore fell 0.2% to 6.7874 against the dollar.

"The rise in the Hang Seng Index is not driven by fundamentals now, just by news flow," Pang said, adding that whether the gains can be sustained hinges on "future progress of U.S.-China trade talks."

China has offered to increase goods imported from the U.S. by a combined value of more than $1 trillion over six years, Bloomberg reported on Friday, citing officials familiar with the negotiations. The report came a day after The Wall Street Journal reported, citing sources, that U.S. Treasury Secretary Steven Mnuchin was considering lifting some or all tariffs imposed on Chinese imports. A Treasury spokesperson later denied the WSJ article. The three main equity indexes on Wall Street added more than 1% each on Friday.

Chinese smartphone maker Xiaomi climbed 1.4% in Hong Kong, extending Friday's 4.3% advance. The company said it bought back 9.85 million shares on Friday following a 6.1 million share buyback on Thursday.

Australian mining company MMG slumped 21.4% after saying it expects to have made a net profit of $65 million to $70 million in the year ended Dec. 31, down from $147.1 million a year ago.

Fosun Tourism Group jumped 9.2% after saying it expects to have made a profit of at least 350 million yuan ($51.6 million) for 2018, compared with a net loss of 295 million yuan a year ago.

Flat Glass Group surged 6.8% after saying the China Securities Regulatory Commission approved its proposed A-share offering for up to 150 million shares.

Yip's Chemical Holdings rose 1.3% after saying a unit agreed to sell Bauhinia Paints Manufacturing (Shanghai) for 269.9 million yuan.

Rubber products maker Prinx Chengshan (Cayman) Holding jumped 12.9% after saying it expects group net profit for 2018 to have increased by more than 150% from the year before.

Haitong Securities edged 1.2% lower following a 39.5% decline in 2018 net profit and a 15.5% decrease in operating income from a year ago.