Market Wrap: Hong Kong stocks hit seven-month high on Spain and US earnings
Hong Kong stocks rose to the highest level since March, tracking a rally across the region, as investors were cheered by Moody's decision to retain Spain's credit rating and US corporate earnings came better than expected.
Daily turnover hit the highest since September 19, reaching HK$57.37 billion while the local volatility index fell to its lowest since September 28, reflecting investors' growing favour for more risky assets.
“I won’t be surprised to see the index to breach intra-year high seen in February in the coming days,” said Ben Kwong, Chief Operating Officer at KGI Asia. “There is no sign of liquidity outflow and the situation is Europe is stabilising.”
The risk of Spain losing market access has been reduced by the willingness of the European Central Bank (ECB) to undertake outright purchases of Spanish government bonds to contain their price volatility, Moody’s said in a report dated October 16. Moody's maintained their rating on Spain’s government bond at Baa3 with a negative outlook.
The benchmark Hang Seng Index added 209.57 points, or 0.99 per cent, to finish at 21,416.64, the highest level since March 2. Up to 38 firms gained on the 49-member gauge, while seven firms fell.
Vincent Chan, strategist with Credit Suisse, said “the worst is over” for China's economy and called on investors to add some beta to their portfolio. Banks, materials and transportation are among his overweight basket.
During a conference call with investors after announcing the deal this morning, Li said he would increase his stake in Li Ning “at an appropriate time”. Yet most analysts do not buy the idea.
“Li’s involvement in Li Ning may decrease over time, though today’s deal would not affect the firm’s fundamentals,” said Elyse Wang, analyst with Haitong International Securities. The move might be a signal that Li plnned to focus more on doing business through Viva China, which is rumoured to be interested in the property sector, according to Wang.