Hong Kong shares jump in surprise rally
Hong Kong shares climbed their most in five weeks charged by a mid-afternoon flash that left traders confused over whether corporate results, an overly active futures market or a key index upgrade spurred the buying. Mainland markets closed lower.
The benchmark Hang Seng index rose 2.4 per cent to 22,888.92 at one point, jumping 175 points within five minutes. The China Enterprises Index rose 1.59 per cent to 10,408.93. Total market turnover, at HK$80 billion, was in line with the recent daily average, though southbound traffic along the stock connect between Shanghai and Hong Kong was weaker than usual.
There was more activity in the futures market, where the volume of contracts traded reached the second highest level in two months. With the market rising since October, short sellers have been squeezed, said Louis Tse Ming-kwong of VC Brokerage, and are repositioning themselves to compensate.
Financials led the gains, with Asian insurance giant AIA among the biggest movers by turnover, up 3.75 per cent to HK$48.45. China Construction Bank was 2.38 per cent stronger at HK$2.38 and Bank of China rose 1.15 per cent to HK$3.53. The rise in mainland bank shares was all the surprising after Chinese regulators announced an 1.7 billion yuan fine on an unnamed bank for loan misselling.
Better than expected earnings and an upgrade from Daiwa from ‘hold’ to ‘outperform’ saw shares in Semiconductor Manufacturing surge 14.29 per cent to 88 HK cents. Computer maker Lenovo jumped 5.77 per cent to HK$7.70 on strong results.
Hong Kong Exchanges and Clearing rose 1.91 per cent to HK$213.8, after it reported an 81 per cent year-on-year net profit growth for the third quarter on Wednesday.
In the mainland, markets closed lower, with the Shanghai Composite index down 0.48 per cent at 3,632,90 and the large-cap CSI300 one percentage point off at 3,795.32. Brokers were especially hard hit as investors took profits, with heavyweight houses including Haitong Securities and Citic Securities off more than 2.5 per cent.
By comparison, Shenzhen’s benchmark index closed 0.28 per cent higher at 2,259.49 while the tech-heavy ChiNext index fell 0.76 per cent to 2,783.30.
“Investors’ long-term sentiment regarding the market seems to remain positive but there also seem to be some concerns about the short performance,” said Gerry Alfonso of Shenwan Hongyuan Securities in Shanghai.
Analysts also pointed at a Morgan Stanley report dated November 11 that upgraded to ‘outperform’ the MSCI Hong Kong index as a possible reason behind the day’s excitement. Index members AIA, CK Hutchison and HKEx have historically outperformed when US Treasury yields rise, as is expected to happen should US interest rates increase next month, Morgan Stanley economists wrote. The US bank downgraded MSCI Singapore citing the weakening Singaporean dollar and exposure to commodity-heavy ASEAN economies.