Hong Kong Stock Exchange

Hong Kong stocks at record close for second day as analysts see more gains to come

Trading volume on the Hang Seng Index reaches the highest since July 2015, while mainland China shares also rise

PUBLISHED : Wednesday, 17 January, 2018, 9:22am
UPDATED : Wednesday, 17 January, 2018, 11:31pm

Hong Kong stocks set a record for a second day on Wednesday, with trading volumes reaching their highest in two years as investors took a fancy to a market that is cheap compared to other bourses and as money from mainland China poured in.

The Hang Seng Index rose 0.3 per cent, or 78.66 points, to close at 31,983.41, a second consecutive record close and ending at a level above the previous intraday all-time high of 31,958.41 set in October 2007. Turnover on the main board increased to HK$178.3 billion (US$22.8 billion), the most since July 2015, according to Bloomberg data.

The Hang Seng China Enterprises Index climbed 0.6 per cent, or 81.50 points, to 12,868.78.

“There’s no factor that can change the course of Hong Kong stocks now and there will be further new highs ahead,” said Ken Chen Hao, a strategist at KGI Securities in Shanghai.

Optimism has been fuelled in the past few days by hopes that more companies will list in Hong Kong after the exchange operator loosened listing rules. One of the biggest beneficiaries on Wednesday was the bourse operator itself, Hong Kong Exchanges and Clearing, which added 2.5 per cent to HK$295.60, accounting for a third of the gain in the Hang Seng.

Other notable gainers included internet giant Tencent, up 1 per cent to HK$449, and Mengniu Dairy, up 5.5 per cent to HK$25.90.

Among banks, Industrial and Commercial Bank of China rose 1 per cent to HK$6.94 and Bank of China gained 1.7 per cent to HK$4.31. Agricultural Bank of China advanced 2.9 per cent to HK$4.30.

Elsewhere, Wanda Hotel Development rose 3.8 per cent to HK$1.38 after the unit of Dalian Wanda Group said it would sell a property project in London, but the buyer, Guangzhou R&F Properties, fell 0.74 per cent to HK$20.20.

Another property firm to decline was Country Garden Holdings, down 5.5 per cent to HK$16.80 after announcing on Tuesday a plan to issue new shares and bonds.

Oil firms also fell after crude prices retreated from three-year highs. CNOOC was down 1.4 per cent at HK$12.36 and PetroChina fell 1.36 per cent to HK$5.82.

Mainland China stocks also rose in heavy trading, with the Shanghai Composite Index adding 0.2 per cent, or 8.08 points, to 3,444.67, its highest since November 13. Shares worth 316.1 billion yuan (US$49.1 billion) changed hands, the most since September.

The ChiNext gauge of smaller firms rebounded 0.7 per cent to 1,742.03, although the CSI 300 Index of big-cap shares slipped 0.2 per cent to 4,248.12. A gauge of 23 brokerages on the Shanghai and Shenzhen exchanges surged 3.7 per cent on Wednesday for the steepest gain in almost five months, Bloomberg data showed.

Brokerage firms were among the biggest gainers, after Shenwan Hongyuan Group upgraded its rating on China’s brokerage industry to overweight. The sector is now cheap, with the price-to-book value 5 per cent below the historic average level, while the return-on-equity ratio may pick up this year thanks to industry consolidation, the brokerage said in a research note.

Guosen Securities jumped by the 10 per cent daily limit to 12.28 yuan, Guoyuan Securities rose 4 per cent to 18.73 yuan and Citic Securities, the nation’s biggest broker, climbed 3.4 per cent to 20.94 yuan.

On the Shenzhen exchange, companies linked to the blockchain technology business took a hit after the exchange said it would crack down on companies claiming to be developing blockchain business models in an effort to boost their share performance.

Client Service International, which develops software for banks and financial institutions, slumped 10 per cent to 31.22 yuan, trimming its gains to 47 per cent this year. The company said in an exchange filing that it has not generated any revenue from the blockchain business and has only four or five researchers in the field.

Enterprise software developer YGSoft tumbled 10 per cent to 12.22 yuan after having advanced as much as 32 per cent over the past month.

The Shanghai exchange is also moving to rein in speculative trading on the theme by suspending stock transaction and requiring relevant companies of clarification, the Shanghai Securities News reported.