China's Trade Surplus Expand to a 2-year High, Hong Kong Stocks Jump

Li Chen
12 Jul, 2024
Hong Kong

Benchmark indexes in Hong Kong advanced but in Shanghai declined as investors reacted to the easing of U.S. inflation and China's international trade data. 

The Hang Seng index gained more than 2% in the hopes that the U.S. Federal Reserve is more likely to lower interest rates in September after consumer price inflation eased in June. 

Property developers in Hong Kong soared on the expectation that Hong Kong interest rates are likely to go down, matching the rate cuts in the U.S., because the Hong Kong dollar is linked to the U.S. dollar. 

China's customs agency showed exports rose more than expected, raising speculation that buyers are stocking goods ahead of the expected increase in tariffs.

But the muted growth in imports suggested that demand for food, animal feed, and raw materials is affected by weak consumer demand and prolonged property market decline. 

 

China's Exports Growth Drives Trade Surplus to a 2-year High

China's exports in June rose 8.6% to a 21-month high of $307.9 billion, indicating the fastest growth in shipments since October 2023, China's General Administration of Customs reported Friday.

Among China's largest trading partners, exports rose 6.6% to the U.S., 0.9% to Japan, 27.6% to Taiwan, 15.0% to the ASEAN region, and 4.1% to the European Union. 

Meanwhile, China's imports declined 2.3% to $208.8 billion, resulting in a trade surplus of $99.1 billion, an increase from $82.6 billion in the previous month. 

Trade surplus expanded to a high not seen since June 2022, after exports advanced and imports unexpectedly declined.  

China's exports are expected to face growing headwinds in the second half amid rising geopolitical tensions and the additional imposition of high tariffs in some of its key markets. 

 

China Stock Movers 

The Hang Seng index increased 2.3% to 18,246.77, and the CSI 300 index decreased 0.1% to 3,466.80. 

For the week, the Hang Seng index advanced 3.3% and the CSI 300 index gained 1.5% 

Property developers in Hong Kong advanced in the hopes that Hong Kong rates are likely to ease following the slight decline in U.S. inflation. 

China Vanke soared 5.1% to HK $4.75, Sun Hung Kai Properties rose 5.6% to HK $72.05, and Henderson Lad Development gained 7.4% to HK $23.35. 

Cirrus Aircraft declined a fraction after the small jet manufacturer priced its stock at HK $27.50 per share in its initial public offering and raised HK $1.5 billion, or $193 million.