Update | Hong Kong stocks post best one-day gain since March on central bank’s scheme to spur lending

Hong Kong stocks posted their biggest one-day gain in seven months after a move by China’s central bank designed to spur lending.

The city’s benchmark index surged above the key 28,000-point level on Tuesday, the first trading session of the fourth quarter.

The Hang Seng Index added 2.3 per cent to 28,173 at the close, racking up the market’s biggest one-day gain since March 16, mainly led by advances in the banking sector, after China’s central bank said on Sunday it will cut the reserve requirement ratio, lowering the amount of cash some banks must hold against loans. The move should encourage lending to small businesses and the agricultural sector.

The Hang Seng China Enterprises Index that tracks major mainland companies listed in Hong Kong, also known as the H-share index, registered 3.6 per cent gain to close at 11,305.

“Market sentiment was lifted by the news of China cutting the reserve requirement ratio, and the surge in US stocks,” said Kenny Tang Sing Hing, vice-chairman and executive director of Jun Yang Securities.

After a month of consolidating, Tang believes the Hang Seng Index stands a chance of touching 28,500 points in October.

ICBC led the advances, with its share price jumping 8 per cent to close at HK$6.3, while China Construction Bank rose 5.9 per cent and Bank of China was up 5 per cent. China Merchants Bank soared 8 per cent.