Chinese shares in rally mode as delegates prepare for 19th Party Congress

Equities in Hong Kong and mainland China could be set for further gains in the final trading week before an important twice-a-decade political gathering gets underway in Beijing, extending a bullish run that has lifted regional share indices to multiyear highs.

Hong Kong’s Hang Seng Index jumped 3.3 per cent last week to close at 28,458.04, reflecting its highest level since December 2007. So far this year the benchmark has gained 29 per cent to rank as the best performer among the world’s main equity indexes, according to data from Bloomberg.

Equities traded in Shenzhen and Shanghai are also expected to be upbeat in post-holiday trade on Monday. The mainland share markets were last active on September 29, the final session of trade before the “Golden Week” holiday.

Local equity analysts said momentum remains positive in the fourth quarter.

“The Hang Seng Index is possible to breach above 30,000 this year,” said Ben Kwong, executive director for KGI Asia. “We are already very close [to that level].”

He said the recent rally was mainly due to record highs on Wall Street and a policy boost from Beijing, as the People’s Bank of China recently announced a targeted cut to the amount of reserves banks are required to set aside against loans, effective 2018 – a move seen as helping to boost lending to small business.