Update | Chinese smaller companies lead Shanghai benchmark to seventh day of gains
Hang Seng Index powers to a fresh record, led by gains in energy; Shanghai Composite extends gains over seven sessions to 4.4pc
China’s stocks rose for a seventh straight trading session on Wednesday, with a gauge of small-cap shares rallying the most in five months, as traders rotated to beaten-down growth companies in the hunt for bargains.
The Shanghai Composite Index was up 0.4 per cent, or 12.96 points, to 3,559.47 at the close, capping a 4.4 per cent streak of gains over the past seven trading days. The ChiNext gauge of smaller companies surged 2.6 per cent for the biggest gain since August. Hong Kong’s Hang Seng Index closed at a record for a seventh consecutive trading day.
While blue-chips retreated on profit taking, traders looked to stocks on the ChiNext gauge including Zhejiang Huace Film & TV and East Money Information, betting that the underperformers would play catch-up. The small-cap index dropped 11 per cent last year against a 22 per cent gain on the CSI 300 Index of large companies.
Leshi Internet Information & Technology tumbled by the 10 per cent daily limit in Shenzhen, as the stock traded for the first time in nine months upon the end of the trading suspension.
“It is like bargain hunting and investors are moving to lagging smaller firms to speculate on a quick rebound in stock prices in the short term,” said Wang Zheng, chief investment officer at Jingxi Investment Management in Shanghai. “But the gain might not last long as small-caps are still expensive and fundamentals remain unchanged.”
Among the ChiNext companies, Zhejiang Huace Film surged 10 per cent to 11.33 yuan and Beijing Enlight Media also jumped by that much to 12.68 yuan. East Money climbed 9.1 per cent to 15.99 yuan. Zhejiang Huace and East Money shed at least 4.5 per cent last year.
Leshi, the listed unit controlled by troubled businessman Jia Yueting, slumped to 13.80 yuan, as the stock resumed trading on an announcement to abolish a plan to buy a filmmaking unit from affiliates. The company forecast a possible full-year loss for 2017 due to a 7.5 billion yuan (US$1.2 billion) debt owed by Jia and his affiliated units. The stock was removed from the ChiNext index by the Shenzhen exchange staring the year.