Hong Kong shares gain as new China subsidy boosts electric car makers
BYD, Brilliance Auto and Harmony Auto jump as new rules seen encouraging production of green cars
Hong Kong stocks continued to rebound, enjoying bigger gains on the last full trading day before Lunar New Year. Mainland markets also moved higher.
The benchmark Hang Seng Index gained 2.27 per cent, or 676.07 points, to 30,515.6 on Wednesday. The Hang Seng China Enterprises Index, known as the H-shares index, added 2.14 per cent to 12,260.99.
Turnover reached HK$110.6 billion (US$14.14 billion) at the close, weaker than usual ahead of the Chinese New Year. On Tuesday, the trading volume was HK$129 billion.
The Hong Kong stock market will be closed from Thursday afternoon until Monday for the holiday. Shanghai and Shenzhen markets will shut from Thursday to Wednesday.
Banks led the rally on Wednesday, with Bank of China Hong Kong rising 4.28 per cent to HK$39, HSBC gaining 2.63 per cent to HK$81.9, and Bank of East Asia adding 2.21 per cent to HK$32.35.
Hang Seng Bank surged 7.77 per cent to HK$191.5, after Goldman Sachs upgraded the stock to “buy” with a price target increased to HK$220.
Several electric car and battery related shares advanced after China increased subsidies for electric cars that can travel further than 400 kilometres on a single charge, but raised the threshold for battery powered cars to get subsidies from the central government.
Citi Group said in a report that the new subsidy rules will give a particular boost to industry leaders such as BYD and SAIC Motor, as they have technological strength in manufacturing electric cars with longer ranges and higher energy efficiency.
Brilliance Auto jumped 4.62 per cent to HK$20.15, BYD climbed 3.56 per cent to HK$71.3, and China Harmony New Energy Auto Holding gained 4.74 per cent to HK$5.75.
In mainland China, the Shanghai Composite Index rose 0.45 per cent to 3,199.16 on its last trading day before the holiday break. The large-cap CSI 300 Index added 0.8 per cent to 3,966.96.
Encouraged by the new subsidy policy, electric power equipment maker Suzhou Industrial Park Heshun Electric and Beijing Dynamic Power both soared by the daily limit of 10 per cent to 9.23 yuan and 5.63 yuan respectively. Shenzhen Auto Electric Power Plant surged 8.18 per cent to 16.4 yuan.
The Shenzhen Composite Index rose 0.48 per cent to 1,739.15, while the Nasdaq-style ChiNext index dipped 0.11 per cent to 1,646.77.
