Update | Mainland China and Hong Kong markets finish week higher
Hong Kong shares posted their biggest weekly gains in six months on Friday, with a leading index of mainland Chinese firms up more than 7 per cent, while mainland Chinese markets ended a Golden Week holiday return on a high as third-quarter earnings season began.
A strong showing by financial and energy large-caps beat an underperforming property sector and helped the Hang Seng Index close 0.46 per cent higher on Friday at 22,458.8 points.
Although fading late in the afternoon, the H-share index finished 1.16 per cent up at 10,406.79 points, and gaining 7.43 per cent for the week in its strongest weekly performance since April.
"In the third quarter, the Hang Seng lost 5,403 points. Basically, it's been oversold by investors, especially institutions," VC Brokerage director Louis Tse said.
He pointed to the yuan devaluation and concern about US interest rates as negative factors which did not play out according to worst-case scenarios.
"Markets discounted for those," Tse said. "There was quite a bit of fear, but fears are subsiding. Now regional markets are not doing badly."
PetroChina shares rose 2.61 per cent on Friday to HK$6.30, tracking crude oil prices higher, and CNOOC gained 3.58 per cent to HK$9.27.
Wharf slipped 0.87 per cent to HK$45.45 and Sino Land fell 1.75 per cent to HK$12.36 despite a fillip to the property sector after minutes from last month's US Federal Reserve policy committee meeting revealed an unexpectedly dovish tone, raising expectations US interest rates will remain on hold until next year.
The Shanghai Composite Index rose 1.27 per cent to close at 3,183.15 points on Friday while the Shenzhen Composite Index climbed 1.2 per cent to 2,216.55 points.
There were winners across the board, although large-caps did best and technology and health stocks lagged slightly. Shanghai rose 4.27 per cent for the week and Shenzhen 5.52 per cent, with trading shortened by a national holiday.
Rising crude prices and a falling US dollar boosted regional currencies and markets, powering Indonesia's market to its biggest weekly gain since April 2009.
"The move has spilled over into two of Asia's most battered currencies, the Malaysian ringgit and Indonesian rupiah, which have made huge gains on the back of international investors' willingness to return to their respective capital markets en masse," said Stephen Innes, a currency trader at Oanda.
Conversely, Sinopec Oilfield Service Corp dropped 3.37 per cent to HK$2.58 after it announced an estimated loss for the first three quarters of 2.06 billion yuan, blaming low prices for constraining investment in oilfield exploration. Credit Suisse has downgraded the stock to underperform with a target price of HK$1.90.
Great Wall Motor also lost out, falling 7.98 per cent to HK$9.92 after releasing its latest production and sales figures. Monthly sales volumes were up 15 per cent at 586,655 units but exports were down 52 per cent to just 19,115 units, as the carmaker upends its product mix to move away from sedans and light trucks and towards SUVs.
In the currency market, the yuan closed at 6.345 against the US dollar, its strongest finish since mid-August, although analysts still expect the yuan to weaken again in the near term.
"We see a gradual yuan weakness and forecast the onshore yuan rate to reach 6.50 by the end of 2015," said Ju Wang, a senior Asian foreign exchange strategist with HSBC.
Additional reporting by Celine Ge
