Energy producers extend Hong Kong stock rally in thin trading

Benchmark Hang Seng Index gains 0.51 per cent and the H-share index rises 0.77 per cent

PUBLISHED : Thursday, 29 September, 2016, 9:20am
UPDATED : Thursday, 29 September, 2016, 10:07pm

Hong Kong stocks jumped for a third day on Thursday, with energy companies among the biggest gainers following a strong advance in oil prices on the night before.

The benchmark Hang Seng Index was up 0.51 per cent at 23,739.47 points and the H-share index rose 0.77 per cent to 9,794.33 points.

Energy stocks were among the biggest gainers, with the sector as a whole jumping 4.31 per cent.

Oil and gas stocks led the rise, adding 2.87 per cent. The rally came after an unexpected agreement among members of the Opec oil cartel to curb output triggered a surge in oil prices. The top gainers among the 50 HSI constituents were dominated by oil firms, with CNOOC charging 5.07 per cent ahead and Sinopec Corp rising 4.03 per cent. PetroChina also ended 3.01 per cent higher.

Bounce in Chinese oil-related stocks after OPEC’s surprise cut in output

Ben Kwong Man-bun, chief operating officer at KGI Asia, said the markets were on an “energy-led rebound” on Thursday, thanks to surging oil prices following the meeting in Algiers on Wednesday where Opec nations agreed to cut production for the first time in eight years.

The market rally was also driven by the growing expectations for the Shenzhen stock connect scheme, which is poised for implementation in late November, according to a Hong Kong stock exchange press release on Wednesday, although the launch date is “subject to market readiness” and approval by regulators.

Coal companies were among the gainers as well, rising 1.66 per cent as a group, as coking coal prices continued to rise on a cut in production. Yanzhou Coal Mining rocketed 9.55 per cent to HK$5.39 and China Coal Energy climbed 7.5 per cent to HK$4.30 while China Shenhua Energy jumped 3.81 per cent to HK$15.80.

However, the rally came with thin trading, with turnover on the main board shrinking to the lowest level for this month at HK$59.07 billion.

Postal Savings Bank of China, which launched on Wednesday the world’s biggest initial public offering over the past two years, was among the most actively traded stocks and closed flat at HK$4.77. The debut fizzled into one of the least successful among large listings after the stock finished at HK$4.77 on its first trading day, which Sinopac Securities head of research Ivan Li described as “not an exciting performance”.

Kwong said there was “nothing special” about the broader markets since the halt of the Shanghai-Hong Kong Stock Connect from Thursday morning until October 10 meant investors would have few cues to take. “I think investors will wait for the resumption of the stock connect and [then we’ll] see whether there’s any change in fund flows,” he said.

Castor Pang, head of research at Core Pacific-Yamaichi International (HK), echoed, saying the thin trading showed investors’ tepid sentiment.

Looking ahead, he said the market would be volatile in October with possible risks from the property market in mainland China and the US presidential election.

In mainland China, the Shanghai Composite Index closed up 0.36 per cent at 2,998.48 points while the CSI 300 Index rose 0.42 per cent to 3,244.39 points.

The Shenzhen Component Index inched 0.43 per cent higher at 10,512.25 points and the Shenzhen Composite Index added 0.39 per cent to 1,985.92 points. The ChiNext gained 0.31 per cent to 2,146.18 points.