HSI extends rally for third session
US retail sales, Japan data bolster confidence
Hong Kong stocks surged yesterday as investors got a rare taste of good news after key overseas economies reported better than expected growth.
The rally was prompted by reports that United States retail sales jumped last month and that Japan's fourth-quarter economic growth exceeded estimates. With that powerful one-two punch from the world's largest economies, local investors carried the Hang Seng Index to its first three-day gain in more than two months.
The benchmark yesterday seemed destined for a big finish after opening more than 700 points higher, and it did not disappoint, closing up 852.13 points or 3.68 per cent at 24,021.68.
'The US market is quite important to the whole world,' said Prudential Brokerage associate director Kingston Lin. 'The US market can still go up further, so I think Hong Kong's Hang Seng Index can go up too.'
If there was no significant negative news from the US, and the local market could maintain the 24,000 level, it might trade up around 25,000 in the near term, Mr Lin added.
Benchmarks around the region also were betting on the US and tracking Wall Street's gains. Taiwan jumped 4.17 per cent, South Korea gained 4.02 per cent, Indonesia rose 2.48 per cent and Shanghai leapt 1.37 per cent to snap a two-day decline. Japan rose 4.27 per cent for the largest one-day gain in almost six years.
Investors took advantage of yesterday's global equity rally to re-enter the local market and recoup some losses in the Hang Seng Index, which had lost 16.69 per cent this year before yesterday's surge.
'Eventually they need to find an excuse to get into the market,' said Taifook Asset Management assistant director Nancy Lee. 'I think this is a good time for longer-term investors to get in.'
The session's gains were distributed across every sector of the benchmark yesterday as all but one of its 43 members increased on the day. As sentiment picked up, investors also chased bargains among stocks hardest hit by recent losses, market observers said.
Ping An Insurance, the benchmark's worst performer this year, gained 6.97 per cent to HK$57.55 to snap a five-day decline. The mainland insurer narrowed its on-year drop to 31.24 per cent.
Hong Kong Exchanges and Clearing advanced 4.42 per cent to HK$165.50 yesterday, lowering losses this year to 25.18 per cent.
China Petroleum & Chemical gained 5.09 per cent to HK$9.09, and CNOOC climbed 4.35 per cent to end at HK$12.
HSBC advanced 3.38 per cent to finish at HK$116.20.
However, after mainboard turnover yesterday failed to reach HK$100 billion for the sixth straight trading day, some questioned whether the local market had actually gained enough support to turn the corner past its recent slump.
'We still need to look at this turnover for a couple of more days to see whether people have regained their confidence or not,' said CLSA analyst Dominic Chan. 'This value was from a very thin volume.'
Mr Chan said the US might not yet be out of the woods and cautioned that more news about subprime losses and credit constraints could send jitters running back into the market.
