Market Wrap: Hong Kong stocks gain on hot money, positive data
Hang Seng rose on Monday after the US jobless rate fell to a four-year low and China reported a mild growth in inflation.
The market was also boosted after Hong Kong’s central bank conducted another intervention in the money market to guard against the appreciation of Hong Kong dollar against the greenback due to the inflow of the hot money.
Market players, however, have casted doubt on the real impact of the inflow of hot money on equity prices recently. After the US announced its latest quantitative easing in September, Hong Kong's equity market has seen a strong rally, gaining more than 14 per cent since then.
Yet fund house allocation demand on the back of cheap valuation, rather than hot money, is driving the market up, they argue.
The benchmark Hang Seng Index added 85.55 points, or 0.39 per cent, to finish at 22,276.72.
Funds began flowing back to the safe-haven utilities sector on Monday. Short selling ratio reached 7.1 per cent. CLSA is forecasting the gauge to reach 24,500 by the end of 2013, while Goldman Sachs has an even more aggressive target of 25,000.
CNOOC (0883.HK), the nation’s biggest offshore energy producer, gained 1.08 per cent to HK$16.78. The firm won the Canadian government’s approval for its acquisition of Nexen, which will make it the biggest ever outbound acquisition by a Chinese firm.