Hong Kong stocks up for 7th straight month, longest stretch of gains in a decade

Tencent hits new all-time high for the eighth time this month, with market cap inching closer to HK$3 trillion; it is up 65pc this year

PUBLISHED : Monday, 31 July, 2017, 9:30am
UPDATED : Monday, 31 July, 2017, 10:35pm

Hong Kong stocks closed out July on an upbeat note, extending their winning streak to a seventh straight month – the longest stretch of monthly gains since 2007 – as heavyweights Tencent, HSBC, and AIA Group set new multi-year highs on robust earnings and corporate deals.

Mainland China’s Shanghai Composite Index also closed higher, logging the best month since February.

The Hang Seng Index advanced 1.3 per cent, or 344.6 points, to close Monday at 27,323.99, the highest level in more than two years.

For July, the index was up 1,559 points, or 6.1 per cent, the biggest percentage gain since January. It was up for a seventh month in a row, the longest run since October 2007. So far this year, it has risen 24 per cent.

The Hang Seng China Enterprises Index, known as the H-share index, rose 0.7 per cent to end at 10,827.84.

Daily turnover increased 10 per cent to HK$87 billion from Friday.

The [Hang Seng] index is already quite strong at the moment. So I think further upside is rather limited
Ben Kwong Man-bun, executive director of KGI Asia

“The [Hang Seng] index is already quite strong at the moment. So I think further upside is rather limited,” said Ben Kwong Man-bun, executive director of KGI Asia.

“But the market is still yet to find an excuse for correction. Now the index has reached above 27,000, but whether it can stay at that level, I am quite sceptical,” he said.

Leading the way were several index heavyweights: Tencent, HSBC and AIA jumped 2.8 per cent, 2.6 per cent, and 3.4 per cent respectively. The three stocks contributed 236 points to the gain in the Hang Seng Index.

Tencent set a new all-time high for the eighth time this month, briefly touching HK$314.4, before paring back and closing at HK$313.4. The stock is up 65 per cent this year.

The market cap of Tencent inched closer to HK$3 trillion (US$371 billion), reaching HK$2.89 trillion by the end of Monday.

Tencent, which is slated to release interim results in mid-August, has bought a 9 per cent stake in UK video game developer Frontier Developments, the British company announced at the end of last week.

HSBC rallied to close at HK$78.45, the highest in more than two years, after reporting a 5.4 per cent increase in pre-tax profit for the first half of 2016, topping market estimates. The banking giant also announced a US$2 billion share buyback for the second half.

Sam Chi Yung, a strategist for Delta Asia Financial Group, said investors from the mainland have been “actively purchasing” big blue-chips in Hong Kong’s market, including HSBC and ICBC.

AIA ended higher at HK$61.55 after the company posted better-than-expected financial results last week.

Hang Seng Bank, a subsidiary of HSBC, recorded a 23 per cent jump in interim profit on Monday, boosting its shares. The Hong Kong lender touched a historic high of HK$170.8 during the day, before finishing up 1.3 per cent to HK$170.

On the mainland, the Shanghai Composite ended 0.6 per cent, or 19.79 points higher at 3,273.03, the best close in nearly four months.

In July, the index rose 2.5 per cent, marking the biggest percentage gain since February.

The large-cap CSI300 gained 0.4 per cent to 3,737.87. The Shenzhen Composite Index and the ChiNext Index added 0.6 per cent and 0.1 per cent to 1,879.1 and 1,736.3 separately.

Combined turnover for Shanghai and Shenzhen increased 18 per cent to 540.5 billion yuan from Friday.

Aluminium makers and steel shares soared. Aluminum Corp of China, Yunnan Aluminium, and Hesteel all increased by their daily limit of 10 per cent.