China, Hong Kong stock markets buck falls in Asia
Expanding factory activity and hope of no new offerings lift sentiment
The mainland stock market, the worst performer among Asian markets this year, rose the most in the region yesterday after the nation's factory activity began to expand again last month.
Gains in both Hong Kong and mainland China bucked the downward trend in other Asian markets.
The benchmark Shanghai Composite Index jumped 1.72 per cent to 2,104.43 points, the biggest daily increase since October 9. The Shenzhen Component Index closed 2.28 per cent higher at 8,663.15 points.
Meanwhile, the Hang Seng Index rose 0.83 per cent to 21,821.87 points, its highest close since August last year, and daily turnover reached a one-week high of HK$57.8 billion.
"The October [purchasing managers' index] shows that the destocking cycle is coming to an end. Investors were buying ahead of a bottoming-out of the Chinese economy," said Li Jun, a Shanghai-based analyst with Central China Securities.
Mainland stocks also gained on speculation that regulators would not approve any new initial public offerings before the Communist Party's 18th national congress next week so as to maintain liquidity in the market.
Some traders said regulators had required local brokers to maintain a net long position in their portfolios at the end of the day before the congress was completed to stabilise the market, Shenzhen Economic Daily reported, citing unnamed sources.
Industrial and Commercial Bank of China, which reported 15 per cent net profit growth on Tuesday, gained 1.31 per cent in Shanghai and 1.4 per cent in Hong Kong. China Overseas, the biggest Hong Kong-listed mainland developer, rose 1.5 per cent. The China Securities Journal reported that some Chinese cities were easing limits on home buying by allowing purchasers to obtain funds more easily.
Yet market watchers are cautious about A shares for the rest of this year.
"Liquidity is still pretty tight as the release of restricted shares remains a big threat. And we don't see any meaningful change in policy to boost liquidity before the new leadership officially takes over next March," Li said.