Hong Kong shares in longest winning streak since 2015 as mainland stocks rally

Shanghai Composite up 1.4 pc; Hang Seng rises 0.6 pc

PUBLISHED : Wednesday, 19 July, 2017, 9:15am
UPDATED : Wednesday, 19 July, 2017, 10:36pm

Hong Kong shares rose for an eighth day on Wednesday in the longest winning streak since April 2015, as Tencent hit a record high while coal and commodity producers rallied on surging mainland counterparts.

The Hang Seng Index rose 0.6 per cent, or 147.22 points, to 26,672.16. The Hang Seng China Enterprises Index, or the H-share gauge of Chinese companies trading in the city, added 1.0 per cent to 10,860.52.

The People’s Bank of China said Tuesday night it would adhere to a prudently neutral monetary policy while the China Securities Regulatory Commission also said it would maintain a bottom line of preventing a systemic risk.

The PBOC and the CSRC were the two latest financial regulators to voice support of increased regulatory supervision, after President Xi Jinping stressed the importance of financial security at a work conference over the weekend.

However analysts said the comments also suggested that regulatory supervision would be made on a targeted basis and not across the board because policymakers aim to avoid excessive tightening that would create systemic risks to the financial system.

“Investors are now moving to the second-tier blue-chip stocks, which are regarded as bargains as their share prices haven’t risen much this year,” said Zhang Haidong, chief investment officer at Shanghai Jinkuang Investment.

“Concerns about the tightened oversight of the financial markets are easing a bit. Investors don’t expect the monetary policy to tighten significantly,” Zhang said.

Tencent gained 3.9 per cent, breaking Monday’s peak of HK$288.8, and rising to a fresh high of HK$298.00.

Shougang Resources surged 9.8 per cent to HK$1.8, China Shenhua climbed 4.1 per cent to HK$18.72, Yanzhou Coal rose 4.6 per cent to HK$8.03

Maanshan Iron gained 1.6 per cent to HK$3.86, Chalco rose 2.6 per cent to HK$4.82 and Jiangxi Copper added 2.7 per cent to HK$13.7

Chinese Estates rose 2.7 per cent to HK$11.52 after climbing by as much as 7.7 per cent after the Hong Kong developer announced today that it has acquired 655.2 million shares, or 5 per cent of China Evergrande, since April, for HK$8.1 billion (US$1.04 billion).

On the mainland, Chinese stocks rebounded Wednesday by the biggest advancement since May 25, as several commodity producers and brokerages rose limit-up by 10 per cent

The Shanghai Composite Index rose 1.4 per cent, or 43.41 points, to 3,230.98, recouping the 1.4 per cent loss on Monday, when nearly 500 stocks fell by the 10 per cent daily limit.

The ChiNext gauge of smaller firms also rebounded 1.0 per cent to 1,684.77, still hovering near its lowest level in two and a half years.

A wide range of futures contracts from hot-rolled bars used in construction to coal have risen more than 20 per cent over the past month on Shanghai and Dalian futures exchanges, as a government campaign to cut excessive capacity has strained supply.

Zinc producer Shengda Ming surged 10 per cent to 14.25 yuan, leading gains on commodity producers, as investors were optimistic that a rally in raw-material futures will bolster earnings for the sector.

Zinc producer Zhuzhou smelter Group surged 10 per cent to 9.59 yuan in Shanghai. Yunnan Aluminium climbed 10 per cent to 9.24 yuan in Shenzhen.

Nonetheless, brokerage stocks are still considered cheap, as the sector is trading at its lowest level against its book value, said Zhang from Jinkuang Investment.

Orient Securities also rallied 10 per cent to 15.70 yuan as investors bought into the brokerage industry on bargain hunting.

Shanxi Securities surged 10 per cent to 11.42 yuan and Guosen Securities advanced 10 per cent to 14.59 yuan.