Hong Kong stocks power to 26-month high; turnover tops HK$100bn for first time in two months

Shanghai Composite up for a fifth day in a row, closing at a 19-month high

PUBLISHED : Tuesday, 01 August, 2017, 9:18am
UPDATED : Tuesday, 01 August, 2017, 10:15pm

Hong Kong stocks powered ahead on the first trading day of August after posting the longest stretch of monthly increases in a decade, with market turnover surging above HK$100 billion for the first time in two months.

The Hang Seng Index ended up 0.8 per cent or 216.24 points at 27,540.23 on Tuesday, the highest level since June 4, 2015. In July, it rose 6.1 per cent, extending the winning streak to a seventh straight month, the longest run of monthly gains since October 2007.

The Hang Seng China Enterprises Index, known as the H-share index, closed up 1.8 per cent at 11,024.13, also the highest in nearly two years.

Daily turnover jumped nearly 20 per cent to HK$103.3 billion, the first time above the HK$100 billion level since June 9.

“Low valuations, a weak US dollar, and stable economic data from China have been supporting Hong Kong stocks,” said Linus Yip, chief strategist for First Shanghai Securities.

“Funds are rotating across sectors,” he added, noting that insurers, banks, property developers, car makers, material suppliers, and tech stocks have been pushed higher “by turn”.

“The sector rotation helped the market maintain stability at the current level.”

Hong Kong stocks up for 7th straight month, longest stretch of gains in a decade

Insurance companies led the way, after the China Insurance Regulatory Commission said it will implement “differentiated regulations”, suggesting it may give industry players with better financial positions more room to try out new products.

Ping An Insurance, China’s second-largest insurer, was the best performer among blue-chip stocks. It briefly hit HK$60.4, the highest level in two years, before paring back and closing up 4.1 per cent at HK$60.3.

Rival China Life Insurance, the country’s largest insurer, jumped 3.6 per cent to HK$25.65.

The two stocks contributed 60 points to gains in the Hang Seng Index.

Banks also advanced across the board, with China Construction Bank rising 1.1 per cent to HK$6.57, ICBC adding 1.3 per cent to HK$5.54, and Bank of China gaining 1.8 per cent to HK$3.92. The three stocks all touched their highest levels in the two years during the day.

HSBC rose further following previous gains, up 0.5 per cent to HK$78.85. On Monday it reported better-than-expected interim results and a share buyback plan of US$2 billion.

Tencent continued to push further into record territory, up 0.3 per cent to HK$314.4. In July, it set historic highs on eight separate occasions.

Tencent’s market cap reached HK$2.99 trillion by the end of Tuesday, a touch away from HK$3 trillion.

On the mainland, the Shanghai Composite Index ended up 0.6 per cent at 3,292.64, the highest level in nearly 19 months. The index has risen for a fifth day in a row.

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The large-cap CSI300 advanced 0.9 per cent to 3,770.38. The Shenzhen Composite Index and the ChiNext Index gained 0.2 per cent and 0.3 per cent respectively, closing at 1,882.47 and 1,741.07.

Combined turnover for Shanghai and Shenzhen markets reached 542 billion yuan (US$80.5 billion), flat with Monday’s figure.

Shanghai-listed Ping An Insurance gained 5.4 per cent to 54.85 yuan, while China Life Insurance rose 4.2 per cent to 28.77 yuan.

Defence stocks surged as China commemorated the 90th anniversary of the People’s Liberation Army, with President Xi Jinping delivering a speech on Tuesday that stressed “military-civilian integration” as a national strategy to build a modern and stronger military force.

Sichuan Hushan Electronic, which manufacturers radar systems, closed up 5.2 per cent to 9.06 yuan. Mechanical engineering company Anhui Shenjian New Materials climbed 3.5 per cent to 7.35 yuan.

In the US, the Dow Jones Industrial Average hit a record closing high on Monday, helped by Boeing, while selling in technology companies checked the S&P 500 and pulled the Nasdaq lower.

The S&P 500 information technology index dipped 0.53 per cent, with Facebook falling 1.86 per cent and Alphabet, Google’s parent company, down 1.34 per cent.

Other Asian markets also traded higher on Tuesday. Tokyo’s Nikkei 250 rose 0.2 per cent and Seoul’s KOSPI gained 1.1 per cent.

Additional reporting by Josh Ye