Hong Kong shares end higher as consumer stocks rally on strong China demand

Hong Kong stocks ended higher on Tuesday, led by strong gains for consumer firms, as they were expected to be less impacted by the Sino-US tensions.

Snapping a three-day losing streak, the Hang Seng index rose 2.1pc to close at 24,890.68, while the China Enterprises Index gained 1.6pc, to 10,153.40.

Leading the gains, the Hang Seng consumer discretionary index ended 3pc higher at a near seven-month peak, with Chinese hot-pot restaurant chain operator Haidilao International Holding surging 13pc to a record peak.

"Investors are shifting their focus to consumer players that benefit from China's robust domestic demand, as they are less impacted by the Sino-US tensions," said Linus Yip, chief strategist at First Shanghai Group.

China is looking to reduce its reliance on overseas markets and technology for its economic development, government advisers say, as US hostility and a pandemic increase external risks that could hamper longer-term progress.

Adding to signs of a recovery, data on Monday showed China's factory deflation eased in July as global oil prices rose and industrial activity climbed back towards pre-coronavirus levels.

China imposed sanctions on 11 US citizens, including lawmakers from President Donald Trump's Republican Party, on Monday in response to Washington's imposition of sanctions on Hong Kong and Chinese officials accused of curtailing political freedoms in the former British colony.

Investors are awaiting a meeting between top US and Chinese trade officials on Saturday to review the first six months of the Phase 1 trade deal.

Goods made in Hong Kong for export to the United States will need to be labelled as made in China after Sept. 25, according to a US government notice posted on Tuesday.

Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.57pc, while Japan's Nikkei index closed up 1.88pc.