Hong Kong’s Hang Seng Index closes just short of 24,000, with turnover above HK$110bn

Chinese banks surge on China’s historic financing figures and Morgan Stanley report

PUBLISHED : Wednesday, 15 February, 2017, 9:18am
UPDATED : Wednesday, 15 February, 2017, 11:01pm

Hong Kong’s benchmark Hang Seng Index briefly breached 24,000 on Wednesday for the first time in four months, before paring back some gains and ending within striking distance of the mark, mainly lifted by a surge in Chinese banks.

The index touched an intraday high of 24,067.62, the first time it broke the 24,000 level in intraday trading since October 11.

The index gave up some of the gains in later trading, but still ended Wednesday up by 1.2 per cent or 291.86 points at 23,994.87, the best close since September 9.

The Hang Seng China Enterprises Index, or the H-shares index, advanced 1.8 per cent or 181.6 points to 10,436.04.

Turnover jumped 30 per cent to HK$111 billion from Tuesday’s HK$85.5 billion, the highest level in five months.

Leading the gains were Chinese banks, with Agricultural Bank of China (ABC) surging 6.1 per cent, China Construction Bank (CCB) gaining 5 per cent, Bank of China (BOC) up 3.9 per cent, and ICBC up 2.8 per cent.

Sam Chi-yung, senior strategist for South China Research, said gains in the broader market were fuelled by continued capital inflows and record closes on Wall Street.

“US Federal chair Yellen’s speech overnight led to a high opening of Hong Kong stocks, and the rally in the banking sector pushed up the indexes further,” he said.

Overnight on Tuesday, US equities scored fresh records after Federal Reserve Chair Janet Yellen offered an upbeat outlook for the US economy and said it would be “unwise” waiting too long to tighten rates.

Sam said the surge in Chinese bank stocks was partially triggered by China’s record-high social financing data for January, which came out on Tuesday.

China’s January new loans reached 2.03 trillion yuan, the second highest in history, while total social financing surged to a record 3.74 trillion yuan, according to figures from the People’s Bank of China. The total social financing is a broader credit and liquidity measure.

“Although the new loan growth fell short of market expectation of 2.44 trillion yuan, the growth was significant. Combining it with the social financing data, it seems that China’s financing demand is rising, which is a good news for banks,” Sam said.

The sentiment in the banking sector also received a boost after Morgan Stanley issued a report that forecast share rises in CCB, BOC, ABC, China Merchants Bank, and Chongqing Rural Commercial Bank in the following two months.

Nonetheless, mainland Chinese stocks pulled back slightly after a five-day winning streak. The Shanghai Composite Index edged down 0.2 per cent or 4.94 points to 3,212.99.

The large-cap CSI 300 Index dropped 0.4 per cent or 14.09 points to 3,421.71.

The Shenzhen Component Index, the Shenzhen Composite Index, and the startup index ChiNext all fell 0.9 per cent each, closing at 10,177.25, 1,947.04, and 1,892.36 respectively.

Power companies rose sharply, after the People’s Daily, the official newspaper of the Chinese Communist Party, quoted a senior defence official as saying that the central government will lend great support to nuclear power development.

Datang International Power Generation soared 10.1 per cent to 4.35 yuan, Inner Mongolia Mengdian Huaneng Thermal Power jumped 4.4 per cent to 3.34 yuan, and Shanghai Electric Power Company gained 3.6 per cent to 13.54 yuan.

With additional reporting from Jennifer Li and Celia Chen