China shares outshine Asia on holiday eve, Hong Kong falls
China shares inched higher on Monday, outperforming other Asia markets as investors chased strength in retailers ahead of a week-long holiday, with the Shanghai benchmark heading for its biggest quarterly gain in three years.
But Hong Kong markets sank to their lowest in two weeks, hurt by a subpar reading in a private survey on factory activity in the mainland and fears that a US government shutdown seemed increasingly likely.
At midday, the CSI300 of the leading Shanghai and Shenzhen A-share listings was up 0.4 per cent, while the Shanghai Composite Index climbed 0.6 per cent.
On the quarter, they are up 9.3 and 9.8 per cent, respectively – the best for the Shanghai benchmark since the third quarter in 2010.
The Hang Seng Index sank 1.1 per cent to 22,951.5 points, its lowest since September 13. The China Enterprises Index of the top Chinese listings in Hong Kong sank 1.3 per cent. If losses hold, this would be their biggest daily loss since August 28.
On the quarter, they are up 10.3 and 11.3 per cent, respectively.
Volumes in both Hong Kong and mainland markets were light ahead of a holiday. Hong Kong will be shut October 1, and the mainland October 1-7.
“On a normal day, the A-share market will probably have dipped given the negative surprise from the flash PMI, but this is the eve of a one-week holiday,” said Guo Yanling, an analyst with the brokerage firm Shanghai Securities.
Suning Appliance jumped 6.9 per cent in Shenzhen and BesTV New Media surged 10 per cent in Shanghai after local media fanned hopes that electronic retailers will enjoy positive sales over the week-long Golden Week holiday.
The final HSBC Purchasing Managers’ Index (PMI) edged up to 50.2 in September from August’s 50.1, although that was well below last week’s flash reading of 51.2, with domestic orders proving to be weaker than preliminary estimates suggested.
China’s official PMI will be released on Tuesday.
Chinese banks fell in Hong Kong, but rose in the mainland as investors were reassured by a central bank statement on Sunday that it would keep policy steady with timely fine-tuning to cope with economic uncertainties.
“After the holiday, the main focus will be the 3rd plenum policy-setting meeting in November, which will raise expectation of policy support. The central bank statement sets the tone for macro policy,” Guo added.
China Merchants Bank rose 1.4 per cent in Shanghai, while falling 1.8 per cent in Hong Kong.
The mainland banking regulator said loan-to-deposit ratios and other regulatory requirements related to cross-border financing for banks will be adjusted for banks in the Shanghai free trade zone, which was launched on Sunday.
Trade zone-related counters rose. Shanghai Waigaoqiao Free Trade Zone Development jumped 5.5 per cent in Shanghai, while Shanghai International Port rose 1.4 per cent and Shanghai Airport climbed 2.8 per cent.
There were losses, however, for Hongyuan Securities , whose Shenzhen shares tumbled 8.1 per cent after the official Shanghai Securities News reported that its general manager and his deputy are being investigated by public security authorities.
Power Assets jumped 3 per cent after announcing plans to spin off its Hong Kong electricity business in a deal that could be worth as much as US$5 billion (HK$62 billion) before the end of the year, IFR reported on Friday.
Sino-Ocean Land sank 2.8 per cent after saying it will issue US$808 million worth of new shares to two major shareholders, raising capital for future development projects.