Hang Seng Index reclaims 23,000 on banking sector gains

Stocks also rise on the news that the Shenzhen-Hong Kong Stock Connect may be launched as soon as November

PUBLISHED : Tuesday, 30 August, 2016, 9:24am
UPDATED : Tuesday, 30 August, 2016, 5:16pm

Hong Kong stocks ended above the 23,000-mark for the first time in more than a week, lifted by a rally in the banking sector.

Analysts said the market sentiment also received a boost from the news that the Shenzhen-Hong Kong Stock Connect may be launched as soon as November.

In Hong Kong, the Hang Seng Index gained 0.85 per cent or 194.77 points to end at 23,016.11, the first close above 23,000 since Aug.18. The Hang Seng China Enterprises Index rose 1.05 per cent to 9,597.25.

Total turnover at the main board increased 8 per cent to HK$58.9 billion from the previous day.

Banking stocks led the gains.

Bank of Communications jumped 2.43 per cent to finish at HK$5.91. Bank of China and Industrial and Commercial Bank of China rose 1.5 per cent and 1 per cent respectively at close, before releasing their interim profit later on Tuesday.

“The overall performance of Chinese banking players did not disappoint the market that much,” said Castor Pang Wai-sun, head of research at Core Pacific Yamaichi. “That supports a rebound in their price.”

Sam Chi-yung, senior Strategist of South China Research, said trading was “choppy” during the day, as the Hang Seng Index August futures expired on Tuesday and investors were cautious.

Nevertheless, the market sentiment is “generally positive”, Sam said.

“We still expect the benchmark to swing around current levels before Friday’s release of non-farm payroll data from the Untied States,” he said.

The US non-farm payrolls, a monthly report from the US Bureau of Labour Statistics intended to represent the total number of paid US workers, is due to come out this Friday. It will be a market focus for clues on future rate movements, according to analysts.

The Shenzhen-Hong Kong Stock Connect may be launched as soon as mid-to late November, Bloomberg cited a presentation slide at a press briefing by China’s securities regulator as saying on Tuesday.

Hong Kong Exchanges & Clearing said earlier this month that the preparation for the scheme might take about four months.

“The news also boosted sentiment, because investors had expected the stock connect to be launched after Christmas,” Sam said.

Among other market movers, Zhejiang Shibao Company saw its Hong Kong-listed shares jump 7.43 per cent to HK$10.7. China Vank Co’s H shares also climbed 2.26 per cent to HK$19.92.

Aviation stocks were under pressure, after China Southern Airlines reported a 10.4 per cent year-on-year drop in net profit for the first half.

China Southern Airlines dropped 6.35 per cent to HK$4.72, rival Air China fell 2.75 per cent to HK$5.66, and China Eastern Airlines lost 4.08 per cent to HK$4.

Sands China outperformed its blue-chip peers, up 3.51 per cent to HK$31. China Petroleum & Chemical Corporation, or Sinopec Corp, rose 0.89 per cent to HK$5.66.

In the mainland, the Shanghai Composite Index closed 0.15 per cent higher at 3,074.68. The CSI 300, which tracks the large caps listed in Shanghai and Shenzhen, was up 0.13 per cent to 3,311.99.

The Shenzhen Composite Index added 0.06 per cent to 2,028.36. The Shenzhen Component Index also finished up 0.04 per cent to 10,729.12. The Nasdaq-style ChiNext index settled higher by 0.11 per cent at 2,195.53.

Gains in financial, oil and military defence stocks helped offset losses in the aviation sector.