Hong Kong stocks hit 25-month high as PetroChina, Evergrande advance

Hong Kong stocks rose on Wednesday, with the Hang Seng benchmark climbing to a 25-month high, as PetroChina and CNOOC advanced on higher oil prices and China Evergrande surged after saying first-half profit may have tripled.

The Hang Seng Index gained 0.3 per cent, or 88.97 points, to 26,941.02 at the close, the highest level since June 25, 2015. It rose as much as 0.6 per cent in Wednesday’s intraday trading to top 27,000 for the first time in two years. The Hang Seng China Enterprises Index, also known as the H-share index, added 0.5 per cent, or 48.76 points, to 10,831.50. Mainland China’s equity benchmark also closed higher.

Buying from mainland and overseas investors has driven the Hang Seng Index up by 22 per cent this year, as investors take advantage of its lowest valuation among Asia’s major stock markets. The city’s equities are now 22 per cent cheaper than mainland’s yuan-traded A shares, according to a gauge tracking the price difference between the two markets.

“The valuation advantage is the key to why Hong Kong stocks are doing so well this year, particularly for these blue-chips,” said Wu Kan, a fund manager at Shanshan Finance in Shanghai. “It looks like the good trend isn’t ending here and the market still has the chance of a catch-up in valuation.”

Oil producers jumped after crude futures rose above US$48 a barrel for the first time since early June overnight. PetroChina gained 3.1 per cent to HK$5.05, the top gainer among blue-chip stocks. Offshore oil producer CNOOC climbed 2.3 per cent to HK$8.77.