Hong Kong and China stocks swung between gains and losses before ending little changed on Monday, as traders remained cautious amid uncertainties surrounding an initial trade deal between the United States and China.
The Hang Seng Index shed 0.01 per cent, or 3.64 points, to 26,494.73. The Shanghai Composite Index rose 0.1 per cent, or 2.47 points, to close at 2,914.48, while the Shenzhen Component Index closed 2.35 points lower at 9,876.27.
"The whole focus of the market now is the 'Phase One' trade deal between the US and China," said Stanley Chan, director of research at Emperor Securities.
Chan said investors wait until Sunday, when the US will have to decide whether to impose scheduled extra tariffs on Chinese goods, to make any significant moves. The Hong Kong market, which lacks a clear driver amid a gloomy economic outlook on both sides of the border, could drop to an even lower level if the two countries fail to strike a deal, he said.
If a deal is reached, the Chinese yuan could strengthen and benefit sectors such as Chinese financials, property developers and aviation stocks, he said. Meanwhile, a major anti-government march in Hong Kong on Sunday had little impact on the market, Chan added.
In China, steel companies led the advance. The highly cyclical sector is benefiting from a fresh round of price hikes, on expectations that infrastructure projects across China will increase as part of the government's efforts to shore up its slowing economy. A gauge of 44 steel companies compiled by Citic Securities rose 2.3 per cent on Monday.
Meanwhile, Chinese pharmaceuticals declined broadly, as investors turned cautious after gaining spectacular returns from star drug makers this year. Jiangsu Hengrui Medicine, China's largest pharmaceutical firm, dropped by 4 per cent to 83.62 yuan, after disclosing four executives planned to reduce their shareholding in the firm by no more than 626,000 shares, or 0.01 per cent of the overall stake. The stock has soared by a jaw-dropping 91 per cent so far this year.
In Hong Kong, state oil firms gained after China set up a new state-owned oil and gas pipeline group, in a long-planned restructuring move aimed at enhancing energy supply amid rising demand. PetroChina gained 1.4 per cent to HK$3.63, while Sinopec Corp rose 1.2 per cent to HK$4.4, and China National Offshore Oil Corporation rose 0.2 per cent to HK$11.32.
In addition, Chinese developer R&F Properties jumped in Hong Kong after reporting a pickup in contract sales. The Guangzhou-based developer soared by as much as 11.5 per cent, on the back of a 6 per cent rise in contract sales to 120.4 billion yuan (US$17.1 billion) between January and November from the same period last year. The stock closed 6 per cent higher at HK$13.34.
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