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Hong Kong, mainland stocks rise for second session, but analysts say outlook remains cloudy
- Hang Seng Index added 0.56 per cent to 24,640.28 on Monday
- Rally will not last as some funds still want to exit amid lofty valuations: analyst
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Hong Kong and mainland stocks rose for a second trading session on Monday, bolstered by heightened expectations of economic recovery in China and a fresh capital influx. Brokers, however, said the market outlook remained cloudy because of a series of uncertainties.
The Shanghai Composite Index advanced 0.57 per cent to 3,278.81, while the Star50 index, which tracks the Nasdaq-style Star Market, rose 2.71 per cent to 1,348.07. The ChiNext Composite Index in Shenzhen rose 1.42 per cent to 2,572.60. In Hong Kong, the Hang Seng Index added 0.56 per cent to 24,640.28.
“Market sentiment has strengthened after a sharp slide last week,” said Zhao Dongmei, an analyst with Guoyuan Securities. “But it seems the rally will not last for too long, because some funds still want to exit amid lofty valuations.”
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Huawen Food, which debuted on Monday, surged to the 44 per cent daily upper limit, and was trading at 7.23 yuan (US$1.06). In Hong Kong, Tencent Holdings led the gains with a 2.6 per cent jump to HK$529.5 (US$68.32).
“Investors face many uncertainties moving into the northern hemisphere autumn, most notably on the US elections and the global pandemic path,” said Stephen Innes, a strategist at AxiCorp. “Unquestionably, the virus story is the dominant macro pivot event, especially for equities, and is more likely to be dominated by optimism surrounding a vaccine. Indeed investors will be keeping their eye on the vaccine prize.”
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China approved exchange-traded funds over the weekend, which will result in additional fund flows to its technology-heavy markets.
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