Hong Kong, mainland equities track higher as HSBC extends winning streak

Hong Kong and mainland markets charted positive territory on Wednesday thanks to the strong performance of financial stocks, with HSBC notching a fresh one-year high.

The Hang Seng Index rebounded up 0.55 per cent at 22,800.92 points, while the Hang Seng China Enterprises Index gained 0.62 per cent to 9,829.58 points.

Turnover on the main board reached HK$62.51 billion, up slightly from HK$60.67 billion the day before.

But this was still relatively low, showing limited benefits from the opening of the Shenzhen-Hong Kong Stock Connect on Monday, according to Linus Yip Sheung-chi, chief strategist at First Shanghai Securities.

“It’s just a rebound, so it has limitations,” he said. “If [the Hang Seng] goes to the 23,000 level, I think the resistance will be there.”

Markets were pulled upward by the strong performance of Chinese financial players, such as banks, brokerages, and insurance stocks, according to Yip.

HSBC climbed 3.31 per cent to HK$65.50, extending sharp gains from Tuesday following long-time bear Morgan Stanley’s upgrade of the stock to overweight from underweight.

The bank has recently bought back millions of its shares from the London Stock Exchange.

HSBC was the most actively traded stock of the day with HK$5.34 billion in turnover, up substantially over the next most traded stock Tencent, which had a turnover of HK$1.78 billion.

“HSBC right now is the market leader, but it’s not healthy because we only see one market mover,” Yip said.

Other banks also gained, with Bank of China (Hong Kong) moving up 1.9 per cent to HK$29.50, its highest level since August.

Standard Chartered rose 2.93 per cent to a more than one-month high at HK$65.35.

But other blue chip stocks were under pressure, with Hong Kong Exchanges and Clearing sinking 1.43 per cent to a three-month low.

Insurance company AIA lost 0.33 per cent to its lowest level in over five months.

On the Shenzhen-Hong Kong Stock Connect, trading was still “not so exciting” as turnover was still low, Yip said, with 1.89 billion yuan in northbound trading, reaching 14.56 per cent of the quota.

However, performance on the trading link remains within market expectations, since investor focus is on stocks with small capitalisation value, he said.

In the mainland, markets ended the day with modest gains.

The Shanghai Composite Index was up 0.71 per cent to 3,222.24 points while the CSI 300 – which tracks the biggest companies by market value listed in Shanghai and Shenzhen – rose 0.48 per cent to 3,475.75.

The Shenzhen Component Index advanced 0.71 per cent to 10,855.72 points while the Nasdaq-style ChiNext gained 0.6 per cent to 2,134.99 points.

Internet giant LeEco’s listed company Leshi Internet Information and Technology suspended trading in Shenzhen on Wednesday morning pending an unspecified announcement.

Shares in the company slipped 7.85 per cent to 35.80 yuan ahead of the trading halt amid concerns over potential layoffs from restructuring.

China stocks are expected to trade sideways ahead of last month’s trade data, set to be released Thursday morning, according to Haitong International sales trading managing director Andrew Sullivan.

“Investors remain cautious with more government tightening expected, but exporters should see some interest as the overnight data shows the US is importing more,” Sullivan said.

Markets are also waiting to see what comes out of the European Central Bank meeting on Thursday and next week’s US Federal Reserve meeting, where interest rates are expected to be raised.

Elsewhere in Asian trading, Tokyo’s Nikkei 225 gained 0.74 per cent to 18,496.69 points and Seoul’s Kospi was up 0.18 per cent.

The Sydney All Ordinaries closed up 0.89 per cent, even as data showed gross domestic product had shrunk by a greater-than-expected 0.5 per cent, the first time the economy recorded three months of negative growth in five years.