Hong Kong stocks hit a 15-month high on Friday, breaching the physiological 22,000 for the first time in 15 months, as hot money continued to flow into the city and investors cheered on positive data from US and China.
The Hong Kong Monetary Authority (HKMA), the city’s de facto central bank, stepped in the money market for ten times over the past two weeks as hot money continued to flow into city. HKMA sold a total of HK$5.04 billion in Hong Kong dollars in the latest move on Friday.
The benchmark Hang Seng Index closed 289.46 points, or 1.33 per cent higher to finish at 22,111.33, the highest close since August 2.
The Hang Seng China Enterprises, which tracks the performance of Hong Kong-listed Chinese firms, added 132.52 points, or 1.24 per cent higher to finish at 10,833.73.
The official PMI showed on Thursday that the nation’s factory activities were back in the expansion zone for first time since May this year.
“People were not as bearish as they were in the middle of the year because China is stabilising. The worst is over,” said Vincent Chan, Credit Suisse’s China equity strategist.
He said the HSCEI had the potential to test the 12,000 level in the coming months, with Chinese firms outperforming the benchmark HSI on valuation.
Investors were also cheerful on the fresh US data. Data from payrolls processor ADP showed US companies added 158,000 workers in October, the fastest pace in eight months. Separately, US consumer confidence jumped in October to its highest level in more than four years, the Conference Board said.
Daily turnover on Friday was the highest since October 18, compared with a year-to-date average of around HK$53 billion, a sign that abundant liquidity, buoyed by consistent hot money inflows, is building positions in equities.
However, Chan is conservative on the impact of the hot money inflow on Hong Kong equity prices. “Although the situation is improving, foreign investors are no longer as bullish on China as they were when QE 2 was launched in 2009. Some were still quite conservative on the China story due to shadow banking, unclear political signals and social stability issues,” Chan told SCMP.
Macau casino operators jumped after the city Macau’s gambling revenue hit a record monthly high in October, official figures showed.
Sands China (1928.HK ) gained 6.33 per cent to finish at HK$31.9. SJM Holdings (0880.HK ) gained 6.11 per cent to finish at HK$18.06.
“We expect Sands China market share to expand from 19 per cent in the third quarter to 23 per cent by 2014,” Deutsche Bank analyst Karen Tang said in an morning note on Friday.
Meanwhile, retail stocks gained momentum on Friday after the city’s September retail sales posted better-than-expected 9.4 per cent growth to HK$34.1 billion.