Hong Kong Index jumps 500-plus points, led by HSBC, insurers, as low valuations spur buying
US indices posted biggest gains in three months.
Hong Kong stocks on Wednesday enjoyed their biggest intraday gain for over a month, as investors took cues from the US stocks rally overnight.
Analysts view the move as a technical rebound amid fundamental factors that have not changed, with the stocks benchmark likely to face resistance at 20,600.
The Hang Seng Index jumped 2.71 per cent, or 537.62 points, to 20,368.05. The Hang Seng China Enterprises Index rose 2.65 per cent, or 220.19 points, to 8,526.75.
Turnover surged to HK$62.01 billion, the highest in nearly two weeks, rebounding from its lowest level of the year on Tuesday, at HK$43.8 billion.
The intraday gain, which is the biggest since April 13, was led by heavyweight sectors including insurance, banking and property.
HSBC Holdings shares jumped 3.81 per cent to finish at HK$50.35. AIA Group gained 3.38 per cent to end at HK$44.3. Henderson Land Development shares rose 3.05 per cent to HK$45.65.
Oil stocks rallied together as crude price in New York reversed from a four-day drop. PetroChina shares ended 3.9 per cent higher at HK$5.33 while Sinopec shares rose 3.55 per cent to HK$5.25.
Peak Sport Products shares jumped 14.06 per cent to HK$2.19, as the mainland Chinese sportswear company announced it was considering a plan to delist from the Hong Kong bourse.
Ben Kwong Man-bun, KGI Asia executive director and head of research, said some investors had closed their short positions after the benchmark fell for nearly a month.
“The negative factor of a US rate rise has been priced in recently, and the rally of US banking stocks on Tuesday gave a clue for the local market that a rate hike could help expand banks’ net interest margin,” Kwong added.
But the negative fundamentals in the market have not changed, such as China’s weak economy and uncertainties in Brexit, while trading turnover is not particularly high, Kwong said.
All three major indexes in the US on Tuesday posted their biggest gains since March, led by the banking sectors as upbeat home sales data sparked rate hike expectations.
New home sales in US in April surged 16.6 per cent year on year, the largest monthly jump in 24 years. The market probability of a US interest rate hike in June was 34 per cent, while a the likelihood of a July tightening was 53.8 per cent.
Lukfook Financial analyst Ricky Huang said Wednesday’s broad share price gain in Hong Kong was a technical rebound.
“The Hang Seng Index has been swinging around a bottom level since May 13 and short sellers failed to drag the index lower. Now we see some are betting on a small rebound,” Huang said.
“The rise was supported by large caps and the turnover is not very high. I think a big rally is unlikely to be seen and the index can hardly climb above 20,600,” he said.
In the mainland, shares investors are still in low spirits as benchmarks dipped a little and trading turnover stood flat at 371.6 billion yuan (HK$440.0 billion). The Shanghai Composite Index fell 0.23 per cent or 6.58 points to 2,815.09. Its intraday volatility was below 1 per cent.
The CSI 300 — which tracks large companies listed in Shanghai and Shenzhen — fell 0.14 per cent, or 4.33 points, to finish at 3,059.23.
The Shenzhen Composite Index moved down 0.24 per cent, or 4.37 points, to 1,800.23 and the Nasdaq style ChiNext lost 0.40 per cent, or 8.26 points, to 2,067.25.
Leading the loss were the shipping and metal sectors, offsetting small gains in banking, coal producers and brokerages.
Additional reporting by Naomi Ng.