China stocks jump further after re-entering bull markets

Investors keep up the buying on improved sentiment in China's economic growth but HK shares decline on US interest rate concerns

PUBLISHED : Saturday, 07 November, 2015, 3:17am
UPDATED : Saturday, 07 November, 2015, 3:17am

Chinese stocks jumped further on Friday, led by a surge in securities firms, after the benchmark re-entered the bull market the day before, as market sentiment improved considerably with investors turning upbeat on China's economic growth and piling back into equities.

However, Hong Kong stocks pulled back, as concerns over an interest rate increase in December by the US Federal Reserve and increasing bad loans at Chinese banks dragged on sentiment.

The Shanghai Composite Index climbed 1.91 per cent to 3,590.032 points, marking a third consecutive day of gains. The index pushed into bull market territory on Thursday, surging over 20 per cent from its August 26 low. For the week, it is up 6.1 per cent.

The large-cap CSI 300 also gained 2.36 per cent on Friday to end at 3,793.374 points. The Shenzhen Composite Index rose 2.82 per cent to finish at 2,152.43 points, also up for the third session, while notching up an advance of 6.8 per cent for the week. The Nasdaq-style ChiNext Index tacked on 3.77 per cent to 2,661.41 points.

Leading the markets higher were securities firms, which rose as several top brokers recorded a month-on-month surge in net profit for October.

"Brokerage houses were the clear winners of the week with investors betting that trading volumes will actually improve as the market becomes more confident," said Gerry Alfonso from Shanghai-based Shenwan Hongyuan Securities.

Citic Securities said late on Thursday that its October profit increased 95 per cent month on month to 1.3 billion yuan.

Analysts said market sentiment has improved considerably after recent data suggested China's economy may be stabilising amid the government's massive stimulus efforts.

However, Hong Kong stocks experienced a more volatile day on Friday, closing down 0.8 per cent at 22,867.33 points. The H-share index settled 0.58 per cent lower at 10,555.97 points.

The benchmark opened lower after US stocks fell overnight as investors turned cautious before a closely watched US jobs report due yesterday and weighed the possibility of a December interest rate increase.

"Mainland banks are dragging the markets after results were mostly uninspiring," said Ivan Li, an analyst from Tung Shing Securities.

British lender Standard Chartered sank 4.6 per cent to HK$76.20, after Fitch Ratings downgraded it following the release of a surprise third-quarter loss by the bank. Turnover hit HK$285 million, against HK$129 million in the previous session.

The bank's London-listed stock dropped further by 0.2 per cent in early trade on Friday, following a 6.3 per cent plunge on Thursday.