Mainland China large-cap index surges 2.6 per cent to four-month high
China Minsheng Bank leads gainers with 10 per cent rise
A key index of Chinese stocks shares closed at a four-month high on Monday as investors warmed to recent macroeconomic data, sending mainland consumer and banking stocks higher, while Hong Kong blue chips finished mostly flat.
Investors liked the recent run of positive mainland data including better than expected loan growth numbers and monthly rises in factory output and fixed-asset investment, analyst Ivan Li from Tung Shing Securities said.
Analysts say investors also expect further cut to mainland base rates in the New Year as well as reductions in banks’ required reserve ratios, freeing up more money for lending.
“Hong Kong’s strength is mainly driven by the China market and the market is getting less pessimistic about China's economic outlook,” Li said.
The large-cap CSI 300 index charged 2.60 per cent higher to 3,865.96, its highest close since mid-August. A 10 per cent surge in shares of China Minsheng Bank to 9.98 yuan led the gainers on the mainland, with the wider Shanghai Composite index up 1.77 per cent at a three-week high of 3,642.47. Industrial and Commercial Bank of China shares rose 1.52 per cent to 4.69 yuan and China Life Insurance gained 3.06 per cent to 29.66 yuan.
Consumer stocks also rallied with car maker SAIC Motor up 4.40 per cent to 21.61 yuan.
The Shenzhen Composite Index rose 0.96 per cent to 2,357.99.
A four-day Communist Party central economic work conference to plan structural reforms and possible stimulus support for the year ahead finished on Monday afternoon, though few details on what was concluded have been released.
“As we head into the final two weeks of the year, the limited year-end liquidity will be something to keep a watch on, particularly during the holiday periods of Christmas and New Year’s Eve,” said Bernard Awe, an analyst for IG Group.
The weakness in US equities and rising volatility “set the stage for a cautious trade in Asia on Monday”, he added, with most markets trading close to flat for the day.
After opening lower Hong Kong’s main benchmark stocks recovered quickly only to trade sideways for much of the day. The Hang Seng Index eventually closed up 0.17 per cent at 21,791.68. The China Enterprises Index tracking locally listed mainland stocks shadowed the mainland higher, closing up 1.17 per cent at 9,746.99.
Agricultural Bank of China shares rose 3.77 per cent to HK$3.30 while Hong Kong Exchanges and Clearing added 1.06 per cent to HK$201. Among the fallers, oil major Sinopec shed 0.65 per cent to HK$4.59.
Fosun International shares rose 1.83 per cent to HK$12.24 even after the firm announced it was withdrawing its bid to buy European banking firm BHF Kleinwort Benson, part of the fallout from the recent disappearance of Fosun chairman Guo Guangcheng. Guo was later revealed to be helping mainland authorities with an investigation and has since reappeared in public.
Airline stocks pulled higher on expectations of lower fuel costs with China Southern Airlines up 9.57 per cent to HK$6.18 and China Eastern Airlines rising 4.32 per cent to HK$4.59.