Energy stocks lift Hong Kong, China markets after OPEC oil production cut agreed

Hong Kong markets closed at their highest level in three weeks on Thursday, buoyed by a surge in the prices of energy companies, as oil prices soared after OPEC members agreed to reduce production.

Hong Kong kicked off December trading with the Hang Seng Index closing up 0.39 per cent, or 88.46 points, to 22,878.23, while the Hang Seng China Enterprises Index increased 0.55 per cent, or 54.25 points, to 9,892.31.

Oil and gas companies were the biggest gainers, rising 2.66 per cent on average as a group and led the market’s rebound thanks to soaring oil prices after OPEC countries finalised an agreement to cut oil production for the first time since 2008. Brent crude futures for January surged 8.82 per cent to US$50.47 per barrel.

China’s largest oil and gas producer China National Offshore Oil Corporation (CNOOC) was the biggest winner among HSI components, closing up 6.13 per cent to HK$10.38, while PetroChina followed and leapt 4.74 per cent to HK$5.52. Sinopec Corp was up 2.40 per cent to HK$5.55 and China Oilfield Services shot up 8.57 per cent to HK$7.98.

Hong Kong markets also gained some support from signs of China achieving better-than-expected economy growth. The official manufacturing Purchasing Managers’ Index (PMI), which measures large state-owned factories, reached 51.7 in November, the highest since the 53.3 hit in April 2012 and matching the previous high in July 2014.

The gains in Hong Kong stocks narrowed on Thursday in later trading, as overall “momentum wasn’t great”, according to Linus Yip, chief strategist at First Shanghai Securities.