Hang Seng Index hits nine-month high as Chinese industrial profit report reassures investors mainland recovery is under way

Cyclical stocks such as banks and property developers lead gains, buoyed by an acceleration in profit growth for Chinese industrial companies

Industrial profits grew at the fastest pace in nine years, increasing 28 per cent in October

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Mainland Chinese industrial profits surged 28 per cent from a year earlier in October, the fastest gain in almost nine years. Photo: Xinhua

Published: 11:10am, 27 Nov 2020Updated: 5:01pm, 27 Nov 2020

Hong Kong and mainland China stocks both gained, with the city’s benchmark closing at a nine-month high, as an acceleration in profit growth for industrial companies added to evidence that a recovery in the world’s second-largest economy will be sustainable.

The Hang Seng Index rose 0.3 per cent, or 75.23 points, to 26,894.68 at the close on Friday. The 50-member benchmark eked out gains every day this week to climb 1.7 per cent in the five-day period, as news of positive results from Covid-19 vaccine trials boosted demand for risky assets.

The Shanghai Composite Index gained 1.1 per cent to 3,408.31, the most in almost three weeks.

Companies whose profits are most dependent on economic growth, such as banks and property developers, paced the gains on the two markets.

Traders remained focused on China’s industrial profit report, even as a technical indicator signalled that Hong Kong’s stocks are overbought and the progress of the Covid-19 vaccine developed by AstraZeneca hit a snag. Profits at industrial companies increased 28 per cent from a year earlier in October, the fastest gain in almost nine years, the statistics bureau said on Friday.

“The overall picture confirms that China is doing better than most and will lead Asia’s recovery into 2021,” said Jeffrey Halley, an analyst at Oanda.