Update | Hong Kong, mainland stocks rally as removal of presidential two-term limit boosts confidence in China

Hong Kong and Chinese stocks rallied on Monday amid optimism over earnings for Chinese companies and increased confidence in long-term stability after Beijing scrapped the constitutional limits on the number of terms the president and vice-president can serve.

The proposal by the Communist Party’s Central Committee, which was reported by the Xinhua News Agency on Sunday, is being widely interpreted as paving the way for President Xi Jinping to stay on beyond his current term.

The Hang Seng Index rose 0.74 per cent, or 231.43 points, to 31,498.60 on Monday, with turnover expanding to HK$123.73 billion (US$15.8 billion) from Friday’s HK$103.33 billion. The Hang Seng China Enterprises Index, known as the H-share gauge, rose 0.78 per cent, or 99 points, to 12,834.06.

“China’s implementation of supply-side reforms has been very successful. The market is in a very healthy state after cutting industrial overcapacity and property inventory,” said Mandy Chan Suk-man, head of China and Hong Kong equities at HSBC Global Asset Management.

Hong Kong Exchanges and Clearing, the bourse operator, was the bigger contributor, adding 37 points to the benchmark index. It rose 3.50 per cent to HK$295.80.

Other financial companies also gained. China Construction Bank added 0.36 per cent to HK$8.47, Bank of East Asia climbed 3.06 per cent to HK$35.40. Ping An Insurance Group increased 1.46 per cent to HK$87.