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Nick Westra

Hong Kong stocks surged yesterday, reversing a two-day decline, as investors joined a regional rally after inflation data on the  mainland provided more evidence of an economic recovery across the border.
The Hang Seng Index rose 727.17 points or 4.03 per cent to close at 18,785.66. 
All but three of the 42 blue chips in the index joined the advance, and 10 jumped at least 5 per cent.
Investors hoped that the latest decline in consumer prices, coupled with other recent signs of stabilisation, signalled the mainland economy was on track for a rebound.
Reports on Tuesday showed that vehicle sales increased in May for the fourth month in a row. 
And the market was optimistic the mainland's monthly retail sales and industrial production levels would also show strong growth when the figures are released later this week.
'China still has one of the best macro stories in the whole of the emerging-market world and developed-market world,' said Khiem Do, the head of the multi-asset group at Baring Asset Management (Asia).
Optimism about the mainland economy spilled over into regional markets yesterday after a sluggish start to the week. Japan's Nikkei-225 Index headed the rally and zeroed in on the 10,000-point mark by climbing 2.09 per cent to 9,991.49 points. South Korea jumped 3.14 per cent, Singapore rose 1.76 per cent and Taiwan edged up 0.75 per cent.
'We saw a breakout everywhere, so Hong Kong rose along with other markets,' said Alex Wong, an asset management director at Ample Finance Group. 'But instead of chasing here, I would chase over the 19,000 [level] because that means it is a real breakout.'
The Hang Seng Index has not closed above 19,000 since September last year. But the benchmark could top that mark this month as heavy trading volumes supported buying interest, said Patrick Yiu Ho-yin, a managing director at CASH Asset Management.
'The market has very strong liquidity, so it may test higher levels,' Mr Yiu said. 
'When investors think a [pullback] will not be so great, others buy back the shares and push up the market.'
Main-board trading turnover yesterday was HK$83.53 billion, surpassing the HK$80 billion level for the sixth time in the eight trading days so far this month.
Among market developments, HSBC Holdings jumped 4.3 per cent to HK$66.75 after receiving approval for an insurance joint venture with Beijing-based National Trust.
Hong Kong Exchanges and Clearing surged 7.95 per cent to a year high at HK$129 after being upgraded by JP Morgan.




HK stocks surge 4pc after inflation figures spark optimism