Hong Kong stocks edge up, driven by gains in insurers, banks and casino operators
- Fund manager Allspring Global said in a note that valuations call for a ‘substantial rally in Chinese shares, but sustainability is harder to determine’
- Index gains were driven by insurers AIA and Ping An and lenders like China Construction Bank and Bank of China, which were among the most heavily traded names
The Hang Seng Index jumped 0.8 per cent to 16,385.87 on Thursday with the Tech Index adding 0.5 per cent, and the Shanghai Composite Index edging up 0.1 per cent.
The Hang Seng Index has now lost 2 per cent this week, the worst in over two month as China’s shaky economic data, Fed’s hawkish stance on rate outlook and rising geopolitical tensions in the Middle East sapped risk appetite. Local stocks are now trading at 8.54 times forward earnings on average, the cheapest among global major peers, according to Bloomberg data.
“Valuation and sentiment are bombed out,” Gary Tan and Derrick Irwin, portfolio managers at Allspring Global Investments said in a note on Wednesday. “This creates conditions for a substantial rally in Chinese shares, but sustainability is harder to determine.”
Offsetting some of the gains, oil giant PetroChina declined 1.5 per cent to HK$7.32 and CNOOC retreated 2.2 per cent to HK$18.40. Macau casino operator Galaxy Entertainment dropped 0.4 per cent to HK$34.05 and Sands China lost 0.8 per cent to HK$18.88 to give up earlier gains.
Other major Asian markets were broadly higher. Japan’s Nikkei 225 gained 0.3 per cent while South Korea’s Kospi jumped 2 per cent and Australia’s S&P/ASX 200 added 0.5 per cent.