China stock market

Hong Kong stocks rise to new 10-year high; Tencent more valuable than Facebook

Bourse operator HKEX surges as market turnover rises to the highest in more than two years, while Chinese markets also gained

PUBLISHED : Tuesday, 21 November, 2017, 9:19am
UPDATED : Tuesday, 21 November, 2017, 11:51pm

Hong Kong stocks advanced on Tuesday to a fresh 10-year closing high, with Tencent moving further into record territory and passing Facebook in market value, while Hong Kong Exchanges & Clearing, the bourse operator, also jumped after the market’s daily turnover exceeded HK$150 billion.

The Hang Seng Index gained 1.9 per cent, or 557.76 points, to close at 29,818.07, the best finish since November 2, 2007. The index has gained for four straight sessions.

The Hang Seng China Enterprise Index, or the H-share gauge, jumped 2.9 per cent to 11,874.37.

The main board’s turnover reached HK$157 billion, the highest in more than two years.

Tencent Holdings hit a record of HK$439.6 before closing at HK$430, giving it a market value of HK$4.08 trillion (US$522.8 billion), surpassing Facebook’s US$521.6 billion, based on Monday’s closing price in the US.

The Chinese internet giant was the most heavily traded stock on the Hong Kong market on Tuesday, with a turnover of HK$21.7 billion.

Hong Kong Exchanges & Clearing gained 5.5 per cent to HK$244.8.

Ping An Insurance gained 8.8 per cent to HK$86.2, part of a broad advance by insurers on optimism that rising bond yields will bolster returns from new investments in fixed-income products.

Ping An lifted the Hang Seng Index by 116 points, making it the biggest contributor. China Life Insurance gained 3 per cent to HK$27.35. PICC Property and Casualty added 4.5 per cent to HK$15.88.

The rise above 3.9 per cent in the yield on China’s 10-year government bonds will persist and, as a result, insurance companies will see significant improvement in earnings quarter by quarter, Sun Ting and He Ting, analysts at Haitong Securities, said in a note.

The Hang Seng Index now has risen by more than 35 per cent this year, in part boosted by a pickup in earnings growth in Chinese firms and by attractive valuations that have lured overseas and mainland Chinese investors.

Still, shares of dual-listed companies trading in the city are about 25 per cent cheaper than their mainland-traded counterparts, according to a gauge compiled by Hang Seng Bank that tracks the price gap between the two markets.

“Big blue-chip Chinese companies are seen as the core assets investors would like to buy and hold now,” said Dai Ming, a fund manager at Hengsheng Asset Management in Shanghai. “The more important thing is that they are still cheap, so the momentum isn’t likely to stop here.”

Geely Auto climbed 3.6 per cent to HK$28.95, bringing its gains to 290 per cent in 2017.

In China, the Shanghai Composite Index rose 0.5 per cent to close at 3,410.5, rebounding for a second day as concerns about tightening liquidity eased after the unveiling of new rules for the nation’s US$15 trillion asset management industry.

The CSI 300 Index of large-cap companies rose 1.8 per cent to 4,217.7.

Citic Securities surged 8.4 per cent to 19.21 yuan in Shanghai. China Merchants Securities jumped 5.4 per cent to 19.87 yuan and Huatai Securities climbed 5.7 per cent to 20.14 yuan.

There are buying opportunities in brokerage stocks, because of low valuations, the prospect of an uptick in profitability and improving sentiment on the equity market, according to Haitong Securities.