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Businessmen walk past an electronic board showing the Hang Seng index which surged at the start on Monday to hit fresh highs along with the Shanghai index in China. Photo: Reuters

Update | Hong Kong and Shanghai hit new 7-year highs as HSBC, China oil majors spark charge

Hong Kong and Shanghai surged on Monday morning to trade at new 7-year highs, deriving inspiration from a rally in both the US and European markets along with reports that caused prices of mainland Chinese oil majors and HSBC to spike sharply higher.

The benchmark Hang Seng Index climbed by 365.74 points, or 1.30 per cent, to end at 28,426.72 by the midday break, the strongest since December 12, 2007. The Hang Seng hit an intra-day peak at 28,529.45.

The Hang Seng China Enterprises Index went up 130.92 points, or 0.90 per cent, to 14,619.91 before the lunch break.

The Shanghai Composite Index added 82.00 points, or 1.87 per cent to 4,475.69, the highest level since February 21, 2008, having traded at a session peak of 4,504.38.

Trading volume of mainland Chinese stocks through the stock connect scheme stood at 5.68 billion yuan and investors had used up just 8 per cent of the daily quota. Trade volume of Hong Kong stocks by mainland investors stood at 5.34 billion yuan and investors had used up 13 per cent of the daily quota.

“It might be worthwhile to look at companies that might be bought ‘southbound’ by China mutual funds but not necessarily H shares,” noted Jeffries analysts led by Sean Darby.

Chinese oil stocks jumped due to a mainland news report that the State Council is mulling on merging the three oil giants, PetroChina, Sinopec and CNOOC, into one company. PetroChina advanced the daily limit of 10 per cent to 14.65 yuan in Shanghai and 4.9 per cent to HK$10.46 in Hong Kong, respectively.

HSBC added 5.15 per cent to trade at HK$77.49 on the back of a report the banking giant is reviewing options on possibly moving its headquarters out of London to Hong Kong.

The market seemed to take in stride news that profit in China’s industrial companies declined 0.4 per cent year-on-year in April and first-quarter profits slipped 2.7 per cent to 1.25 trillion yuan, according to China Statistics Bureau’s data released on Monday.

Sentiment was also bolstered by Wall Street and the European markets’ performance last Friday with the Dow Jones industrial average gaining 21.45 points, or 0.12 per cent, to 18,080.14. The S&P 500 rose 4.76 points, or 0.23 per cent, to 2,117.69 and the Nasdaq Composite gained 36.02 points, or 0.71 per cent, to 5,092.09.

The charge in the US was led by tech giants Google, Amazon and Microsoft with results from Apple, the most expensive company in the world, due out in the next few days.

The pan-European FTSEurofirst 300 stock index rose 0.4 per cent to close at 1,626.83, supported by a German business survey that rose by more than expected for April. The prospect of a break-through in Greece’s debt drama underpinned markets.

Market watchers are now closely watching the official PMI figure (Purchasing Managers Index) for April due this Friday although exchanges will be closed that day for the May 1 holiday.

The HSBC survey on Friday showed that PMI slipped to a 12-month low, lifting Asian markets on hopes of continued monetary easing and possibly leading to a delay in the much anticipated increase in interest rates by the US Federal Reserve. 

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