Mainland banking stocks surged in Hong Kong yesterday on rosy profit forecasts by Industrial and Commercial Bank of China and China Merchants Bank, fuelling the benchmark index's rise to a fresh record for the sixth consecutive session.
The Hang Seng Index rose 0.3 per cent to close at 22,885.84 while the H-share index, which tracks 41 state-owned enterprises, hit a record 13,221.12 after rising 1.51 per cent. Turnover reached the second-highest level ever at HK$109 billion.
'Mainland shares continue to run ahead on rotational buying and in the short term the trend of rising to test the 23,000-point resistance level will remain intact. But we expect some profit-taking pressure when the index hits resistance,' said Ben Kwong Man-bun, the chief operating officer at KGI Asia.
'Short-term market liquidity is sufficient to hold up the market and overseas market performance is quite strong, so overall market sentiment is especially strong.'
Shares in ICBC advanced 5.07 per cent to HK$4.97 after the mainland's biggest lender said first-half profit grew more than 50 per cent.
Merchants Bank shares gained 7.21 per cent to a record HK$28.25 after it reported that profit growth more than doubled in the first half.
'Shares of other Chinese banks and insurance firms may also benefit as market players speculate they would also have unexpectedly high profit growth,' said Alex Tang, the research director at Core-Pacific Yamaichi International.