China stocks extend weekly gain as China United surges on shake-up plan; Hong Kong stocks also higher
Mainland stocks advanced on Monday, extending the benchmark’s biggest weekly gain in four months, as China United Network Communications surged by the daily limit on a plan to sell new shares to private investors amid a shake-up of the state-owned mobile-phone operator.
The Shanghai Composite Index rose 0.6 per cent to 3,286.9 at the close, extending a 1.9 per cent gain last week. The CSI 300 Index advanced 0.4 per cent to 3,741.
Hong Kong indexes were also lifted by China Unicom and the gains in oil sector, with the Hang Seng Index advancing 0.4 per cent, or 107.1 points, to 27,154.7, while Hang Seng China Enterprises Index also gaining 0.5 per cent to 10,751.5.
China Unicom climbed 2.9 per cent to HK$12.3, while oil company Cnooc ended up 3.9 per cent, or 0.3 points, to HK$9.
Tencent gained 0.3 per cent to HK$326.8. AAC Technologies Holdings, a supplier of Apple, ended up 4.7 per cent to HK$117.5 after Credit Suisse Group raised the rating on the stock to outperform from neutra, citing valuation laggards in the sector and potential new designs.
Sunace China Holding, the property developer owned by Sun Hongbin, ended up 6.7 per cent to HK$19.1 after saying first-half profit may have jumped more than 15 times from a year earlier on project acquisitions and an increase in profit margin.
On the mainland, China United, the nation’s second largest mobile-phone operator that owns Hong Kong-listed China Unicom, is the latest state owned enterprise (SOE) to undergo a revamp after the merger of the country’s two biggest makers of high-speed trains three years ago. Creating bigger state players and introducing outside strategic investors serve President Xi Jinping’s goal of bolstering profitability and efficiency of China’s bloated SOEs.
“China United is a high-profit SOE reform and the government wants to use it as a benchmark for other SOE reforms,’’ said Wang Zheng, chief investment officer at Jingxi Investment Management in Shanghai. “It’s no surprise that the shares are surging. The stock will probably rise by another 50 per cent.’’
China United jumped 10 per cent to 8.2 yuan in Shanghai on Monday, as the stock resumed trading after being suspended since April. The company said in a statement that strategic investors including Tencent Holdings and Baidu will buy up to 9 billion shares in the company for 61.7 billion yuan (US$9.3 billion) in what analysts call a mixed ownership reform.
Joyoung, the nation’s biggest maker of soybean-milk machines, soared 10 per cent to 20.13 yuan and Yantai Zhenghai Magnetic Material jumped 10 per cent to 11.83 yuan. The two companies’ interim results showed China’s pension fund has emerged as their major shareholders in the second quarter.
It was the first time that the nation’s pension fund showed up as listed companies’ substantial shareholders after it was allowed to invest in mainland-listed shares, with the initial investment estimated at 15 billion yuan.