Rate cut hope pushes index above 31,500
Wong Ka-chun, Daniel Ren and Frederick Yeung
Property stocks lead market
Hong Kong's share market broke through 31,500 yesterday, and analysts expect it to keep climbing.
Yesterday's gains were powered by strong increases in property stocks ahead of an anticipated interest rate cut later this week.
The Hang Seng Index advanced for a third day, rising 3.94 per cent to 31,604.21 at one stage before ending the session 3.89 per cent higher at a record 31,586.9 points. The blue-chip index has gained more than 2,000 points over the past three days.
The H-share index, which tracks mainland companies listed in Hong Kong, rose 3.3 per cent to break through 20,000 and end at a new record of 20,194.14.
Turnover was a hefty HK$177.6 billion.
Mainland markets saw a healthy rebound yesterday, despite a warning from a top securities regulator that investors should understand that stock markets involve risk.
The Shanghai Composite Index jumped 158.37 points, or 2.83 per cent, to 5,748.0. The Shenzhen Composite Index added 25.8 points, or 1.87 per cent, to 1,403.86.
Shang Fulin , chairman of the China Securities Regulatory Commission, said in a report in the People's Daily yesterday that most new entrants to the mainland stock market did not understand the risks involved and need to be educated.
It was the second time in two weeks that Mr Shang has warned investors who are betting the market will keep climbing, underpinned by the mainland's buoyant economy.
The mainland rebound came after talk last week of an interest rise prompted investors to take profits, cutting almost 4 per cent from the benchmark Shanghai index.
European markets were higher last night, with the FTSE 100, the DAX and the CAC 40 all up more than half a per cent. In early US trade, the Dow Jones industrial average and S&P 500 were both up about 0.3 per cent.
Investment bank CLSA has lifted the HSI and H-share index targets to 32,861 and 22,700 points, respectively. 'Valuation expansion of the Hong Kong developers will likely march on with further interest rate cuts from the US on the horizon to fuel more hype in the physical property market,' CLSA analyst Nicole Wong wrote in a report.
Ben Kwong Man-bun, KGI Securities' chief operating officer, said the market was being lifted by the possibility of a rate cut by the US Federal Reserve later this week and the weak Hong Kong dollar made Hong Kong dollar assets look competitive.
'The Hang Seng Index faces upside resistance at 33,000 and has strong support at 30,000. But the market will take profits if the US Federal Reserve decides to cut interest rates as expected,' Mr Kwong said.
Michael Wong, research director of Hantec Investment International, said the positive sentiment should provide good support for the market. He expects the HSI to find strong support at 30,000 in the short term.
With property players first in line to benefit from any rate cut, the real estate sector dominated yesterday's rally. Local developers Cheung Kong (Holdings), Sun Hung Kai Properties and Wharf (Holdings), all notched up records. Of the 40 blue-chip HSI stocks, 18 hit new highs.