Hang Seng jumps 1.3pc to 15-month closing high
Hong Kong shares had their best week in seven, with the Hang Seng Index hitting a 15-month high as fund inflows buoyed hopes of more gains before year’s end, encouraging investors to build riskier positions.
Positive US data helped, ahead of a non-farm payrolls report later in the day that is expected to show US companies added workers in October at the fastest pace in eight months.
The Hang Seng Index rose 1.3 per cent on Friday to 22,111.3, breaking above chart resistance at about 22,000 on its way to its highest close since August 2, last year. It gained 2.6 per cent this week, its best weekly showing since September 10-14.
In the mainland, the CSI300 Index of the top Shanghai and Shenzhen listings rose 0.4 per cent on the day and 2.6 per cent for the week. The Shanghai Composite Index gained 0.6 per cent on Friday and 2.5 per cent this week. It was the best week for Chinese markets since September 24-28.
“We could see more gains from here because funds will need to chase performance as the year draws to a close,” said Alan Lam, Julius Baer’s Greater China equity analyst.
“Earnings were mostly in line and misses have not been too major. With data pointing to the China economy stabilizing, we may see more interest in Chinese equities after the 18th Congress meeting next week,” Lam added.
Lam said the laggard H-shares would lead further gains in Hong Kong, noting the China Enterprises Index of the top Chinese listings in Hong Kong, or the H-share index is up 9 per cent this year, compared with the Hang Seng Index’s 20 per cent ascent.
Gains in Hong Kong on Friday came in the highest turnover since October 18. Daily average turnover has risen by about 20 per cent since the start of September, spurred by improving China economic data.
A tranche of October data is expected late next week, including inflation, urban investment, industrial output and retail sales on Nov. 9, trade data on Nov. 10 and money supply and loan growth data anytime between November 10 and 15.
Citing data from EPFR Global, which tracks fund flows, Lam said money coming into China equity funds rose for a seventh-straight week and was the most in almost two years.
Bourse operator Hong Kong Exchange (HKEx) rose 2.3 per cent to its highest since mid-April on hopes that increased turnover will boost its bottomline.
The government said on Friday it had no plans to change its currency peg against the US dollar. It dismissed talk that authorities are rethinking policy after being forced into heavy sales of the Hong Kong dollar to curb its strength.
Top performers on the day included the Macau gaming sector after gambling revenue there rose a better-than-expected 3.2 per cent in October from a year earlier, buoyed by a week-long holiday in China that enabled cash-rich mainland gamblers to bet in the world’s largest casino market.
Sands China soared 6.3 per cent to the highest since late April, while Galaxy Entertainment was up 7.6 per cent to a record high since listing 21 years ago.
China-focused jeweller Chow Tai Fook surged 9.6 per cent in heavy volume, leading a sector rally as investors bet on a pick-up in luxury spending on hopes of favourable economic policies from the coming party congress in Beijing.
At China’s 18th National Congress meeting, which starts on November 8, a once-in-a-decade political transition will commence as the Chinese Communist Party elects new leaders, alleviating some political uncertainty for investors.
Positive Hong Kong September retail sales figure released late on Thursday also helped.
Chinese railway, steel, construction and other infrastructure-related shares gained as investors looked to add risk. In Hong Kong, Angang Steel climbed 6.1 per cent, and China Railway Construction was up 5.9 per cent.