Stock Talk

Market Close: Hang Seng rises to 19-month high

PUBLISHED : Friday, 18 January, 2013, 4:41pm
UPDATED : Friday, 18 January, 2013, 7:19pm

Hang Seng rose to the highest level in more than 19 months after China’s fourth-quarter GDP growth beat market consensus and yen fell to a 2.5-year-low on speculation the Japan central bank may announce an open-ended asset buying scheme that could inflate the equity markets.

Fund managers and strategists said the index was likely to see some corrections ahead of the Chinese New Year, but the index wouldn’t fall much as cash continued to flow into the city and the China recovery story was not yet priced in.

The benchmark Hang Seng Index went up 262.02 points, or 1.12 per cent, to finish at 23,601.78, the highest level since June 2011.

The Hang Seng China Enterprises Index jumped 2.1 per cent as the onshore market gained 1.4 per cent.

China’s GDP growth came at 7.9 per cent compared with a market estimate of 7.8 per cent in the fourth quarter, adding believe that the nation’s economy has turned the corner.

“The positive surprise in economic performance was associated with strong retail sales and recovery in exports,” said JP Morgan.

The bank revised China’s economic forecast for 2013 to 8.2 per cent on Thursday after the official data. China’s consumer sector and mainland banks were the biggest boosts to the benchmark.

Industrial & Commercial Bank of China (1398.HK) added 1.7 per cent to finish at HK$5.94. China Construction Bank (CCB.HK) gained 1.5 per cent to finish at HK$6.63.Belle (1880.HK) gained 3.36 per cent to finish at HK$7.99. Sportswear firm Li Ning (2331.HK) jumped 8.7 per cent to finish at HK$6.84.

“There is just too much cash around,” said Hou Wey Fook, chief investment officer at Bank of Singapore.

“China’s corporate earnings growth is in a turnaround point to see positive growth this year and MSCI China has the best potential to outperform the regional market in 2013,” he said.

UOB Kay Hian strategist Steven Leung said large-caps would benefit most from the weakening yen as their shares are normally more liquid.

The benchmark is likely to hover around 23,500 in the coming weeks on the back of abundant liquidity and as the China recovery story is not fully priced in, he said.

Barings asset management said mutual funs over the past three to four months are shifting their allocation back to the equity, especially the high dividend-yielding shares, to capture the bull run for equities.

“This is a year of equities, rather than bonds,” Barings fund manager Khiem Do said.