Hong Kong, China shares edge higher, shipping firms stronger
Hong Kong and China shares crept higher early Thursday, led by Chinese financial and shipping counters as an index of freight costs kept raising in another sign the global economy is on the mend.
At midday, the CSI300 of the leading Shanghai and Shenzhen A-share listings was up 0.5 per cent, while the Shanghai Composite Index inched up 0.1 per cent and was at its most technically overbought level since October 2010.
The Hang Seng Index rose 0.2 per cent to 22,993 points. The China Enterprises Index of the top Chinese listings in Hong Kong climbed 0.4 per cent, and has soared almost 21 per cent from a June 25 trough.
“We are still in a relatively early stage of this rotation back into Chinese equities because not every fund manager has the flexibility to make changes too quickly,” said Linus Yip, a Hong Kong-based strategist at First Shanghai Securities.
Some of the gains for shipping stocks reflect “a reversal of the steep losses the sector suffered over the past months,” he added.
The Baltic Dry Index jumped 5.7 per cent on Wednesday to its highest since December 23, 2011 and has leaped 63.5 per cent since an Augsut 12 trough. China Shipping Container Lines (CSCL) surged by the 10 per cent maximum limit in Shanghai, but a more modest 0.9 per cent in Hong Kong.
Rising cement prices, along with hopes that the bigger players will benefit from industrial consolidation, helped lift China National Building Material (CNBM) 3.1 per cent to its highest since August 15.
Deutsche Bank analysts, in a note on Thursday, said that cement prices are rising in southern Guangdong province, with more hikes expected as the sector enters a season of peak demand in the fourth quarter.
Sun Hung Kai Properties climbed 1.1 per cent ahead of its annual earnings later in the day. The stock, down 10.8 per cent in 2013, is now trading at a 25.6 per cent discount to its 12-month forward earnings, according to Thomson Reuters StarMine.
China coal counters sank after Beijing unveiled comprehensive measures to tackle air pollution on Thursday that involves slashing coal consumption and closing old polluting steel mills, cement factories and aluminium smelters.
China Shenhua Energy fell 2.8 percent in Hong Kong and 1 per cent after closing at its highest in nearly three months in Shanghai.
Sino Biopharmaceutical shares plunged by as much as 25 per cent to their lowest since February and were down 16.5 per cent when trading was suspended shortly before the midday break.
The company said it has set up a team to investigate allegations broadcast on state television that its majority-owned subsidiary had paid for illegal overseas trips for doctors.