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Mainland China and Hong Kong markets rise after Beijing appoints new top regulator

Shanghai Composite Index up 2.18 per cent to highest level in almost a month

PUBLISHED : Monday, 22 February, 2016, 9:29am
UPDATED : Monday, 22 February, 2016, 5:30pm

Mainland investors cheered the appointment of a new chief securities regulator, pushing Shanghai’s benchmark index to a one-month high on Monday.

Positive sentiment also spilled over to Hong Kong, bolstering its benchmark Hang Seng Index, despite index heavyweight HSBC posting disappointing annual results.

The Shanghai Composite Index rose 2.18 per cent, or 62.30 points to 2,922.32 by the close on Monday, the highest level since January 25. Turnover rose to 238.7 billion yuan (HK$284.6 billion), from 178.4 billion yuan on Friday.

Sectors including insurance, steel, coal mining and cement led the rally. China Life rose by 10.01 per cent, hitting the daily upward limit, to 22.20 yuan, after announcing on Saturday that premiums in January jumped 44.12 per cent to 123.8 billion yuan.

The CSI 300 Index, which tracks Shanghai- and Shenzhen-listed blue chips, gained 2.2 per cent to 3,118.87, the Nasdaq-style ChiNext Index rose 1.56 per cent to 2,245.56 and the Shenzhen Composite Index added 2.04 per cent to 1,888.18.

On Saturday morning, Xinhua reported that the State Council had appointed Agricultural Bank of China chairman Liu Shiyu as chairman of the China Securities Regulatory Commission (CSRC), replacing Xiao Gang.

This shows Beijing is sending a signal that they are not sticking to a textbook, but will fix the major problem on the stock markets as soon as possible
Brett McGonegal

“Sentiment was boosted on the A-share market by the appointment of a new CSRC chair,” VC Brokerage director Louis Tse said. “The [Shanghai] benchmark can test 3,000 for opening on Tuesday.

“The positive sentiment even spilled over to the Hong Kong market today. But we should bear in mind that one cuckoo does not make a spring. Everything will boil down to the economic outlook.”

Brett McGonegal, former chief executive of Reorient Group and now an independent financial commentator, said the mainland authorities were trying to assure the public of their determination to get things done.

The timing of the announcement came as a bit of a surprise, he added, with most people expecting an appointment after next month’s meeting of the National People’s Congress.

“This shows Beijing is sending a signal that they are not sticking to a textbook, but will fix the major problem on the stock markets as soon as possible,” he said.

The Hang Seng Index nudged up by 0.93 per cent, or 178.59 points to 19,464.09 on Monday, the highest level since February 2. The H-share index, tracking mainland-based companies listed in Hong Kong, rose 1.34 per cent, or 108.80 points to 8,221.37.

Sectors including metals, insurance and banking posted the biggest gains.

Hang Sang Bank rose by 6.49 per cent to HK$134.50 by the close after announcing its net profit increased 82 per cent to HK$27.49 billion last year, in line with market expectations, and that it would pay a special dividend of HK$3 per share.

But HSBC ended 2.19 per cent lower at HK$49.15 after it announced a surprise net loss for the fourth quarter of last year due to lower-than-expected credit growth in Asia, with a continuation of the slowdown in trade.

“Apparently, investors are concerned about the management plan and dividends policy of HSBC,” Tse said. “But anything below HK$50 may still bring medium hold opportunities, based on the historic performance of the stock.”

Additional reporting by Brendan Clift

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