Hong Kong stocks hit 21 month high, mainland China indices rebound

Hang Seng Index closes up 0.4pc to 25,125.55 while the Shanghai Composite added 0.3pc to finish at 3,061.50

PUBLISHED : Thursday, 11 May, 2017, 9:11am
UPDATED : Thursday, 11 May, 2017, 10:22pm

Hong Kong stocks rose to a 21-month high on Thursday following an overnight rally in US equity markets as rising oil prices lifted energy shares, while mainland Chinese markets rebounded from a seven-month low although concerns over a regulatory crackdown linger.

The Hang Seng Index gained 0.4 per cent or 110.13 points to 25,125.55, the highest closing level since July 2015, while the Hang Seng China Enterprises index rose 0.3 per cent or 30.21 points to 10,257.63.

China’s second largest internet giant Tencent – the city’s most heavily traded stock – added 1.7 per cent to HK$254.60. Mining shares also saw strong trading with Zijin Mining rising 1.2 per cent to HK$2.56 and Zhaojin Mining up 1.3 per cent to HK$6.41.

On the mainland, shares saw a “technical rebound because previous declines were too fast”, according to Fang Chaoyi, equity analyst at CICC. “However, concerns about the regulatory crackdown on the financial sector still exist in the market.”

The Shanghai Composite Index rose 0.3 per cent to 3,061.50 while the CSI 300 – which tracks the large caps listed in Shanghai and Shenzhen – was up 0.6 per cent to 3,356.65.

Concerns about the regulatory crackdown on the financial sector still exist in the market
Fang Chaoyi, equity analyst at CICC

The Shenzhen Component Index rose 0.2 per cent to 9,776.45 and the Nasdaq style ChiNext was up 0.1 per cent to 1,772.41, but the Shenzhen Composite Index fell 0.2 per cent to 1,819.15.

Stocks related to the Xiongan new economic zone, many of which are smaller firms listed in Shenzhen, also rose modestly. The zone, planned for Hebei province, is modelled on the Shenzhen Special Economic Zone and the Shanghai Pudong New Area.

Shenzhen-listed Shanghai Hanbell Precise Machinery rose 0.3 per cent to 17.88 yuan and China Zhonghua Geotechnical Engineering Group was up 1.8 per cent to 12.51 yuan

Overnight on Wall Street, US stocks jumped on gains by energy companies. The price of US crude oil rose 3 per cent after Iraq and Algeria joined Saudi Arabia in agreeing to an extension of Opec supply cuts, and after US inventories dropped further than expectations. The falling inventories made investors more optimistic about energy company profits.

The S&P 500 gained 2.7 points, or 0.1 per cent, to close at 2,399.6, and the Nasdaq Composite added 8.6 points, or 0.1 per cent, to end at 6,129.1. However, the Dow Jones Industrial Average fell 32.7 points, or 0.2 per cent, to close at 20,943.1.

In Asia, Tokyo’s Nikkei 225 added 0.3 per cent to 19,957.93, and Sydney’s S&P/ASX 200 increased 0.3 per cent.