Hang Seng Index

Hong Kong stocks climb most in four weeks as Ping An rises to record price on rising debt yields

Hang Seng ends 1.2 per cent higher at 28,594.06. Shanghai Composite gains 2.57 points to 3,395.91

PUBLISHED : Wednesday, 01 November, 2017, 9:18am
UPDATED : Wednesday, 01 November, 2017, 11:13pm

Hong Kong stocks rose on the first day’s trading in November, driving up the Hang Seng Index by the most in four weeks, as Ping An Insurance climbed to a record high to lead gains among Chinese insurers on optimism rising bond yields will boost future investment returns from the debt market.

The Hang Seng ended 1.2 per cent higher, or 348.52 points, at 28,594.06. The Hang Seng China Enterprises Index, or the H-share gauge, gained 1.1 per cent to 11,636.49.

Trading volumes on the city’s exchange were 21 per cent above the 30-day average, according to Bloomberg data.

A further 2.2 per cent gain from the current level would lift the Hang Seng Index to its highest level since December 2007. The benchmark has gained 30 per cent this year, making it the best performer among Asia’s major stock markets.

The recent accelerating uptick in the yield on China’s 10-year notes stoked buying of insurance stocks on expectation the industry will reap better returns from its new investment in the high-yielding debts, according to GF Securities and Guosen Securities.

Bond yields have risen to a very high level in the past two weeks, which helped insurance companies a lot
Louis Tse Ming-kwong, a director of VC Brokerage in Hong Kong

The yield on sovereign bonds rose to a three-year high of 3.908 on Monday on speculation policymakers will strengthen scrutiny of the financial markets after the 19th party congress.

“Bond yields have risen to a very high level in the past two weeks, which helped insurance companies a lot,” said Louis Tse Ming-kwong, a director of VC Brokerage in Hong Kong, adding that Chinese insurers invest most their assets in fixed-income products.

Ping An, China’s second-largest insurer, gained 2.6 per cent to an all-time high of HK$70.30. China Life Insurance, the nation’s biggest, jumped 7.4 per cent to HK$27.70, the highest close since November 2015.

PICC Property and Casualty jumped 8.4 per cent to HK$16.76 and the People’s Insurance Company (Group) of China also surged 8.4 per cent to HK$4.02.

The yield on the 10-year bonds fell 1.7 basis points to 3.862 per cent on Wednesday for a second day of declines after the central bank injected cashes into the banking system.

Tencent Holdings, the biggest weighting on the Hang Seng Index, gained 2.9 per cent to a record HK$360 ahead of its quarterly release this month.

BYD, China’s largest maker of electric cars, rose 0.8 per cent to HK$68.95, on a plan to form a joint venture for seating solutions with car parts supplier giant Faurecia.

Hong Kong Exchanges & Clearing, the operator of the city’s bourse, added 1.8 per cent to HK$221.20, even after Tapestry said it would withdraw a secondary listing in the former British colony. The owner of New York luxury brand Coach cited low trading volumes of secondary shares, becoming the second company to scrap listing plans in the city this week after Swiss commodity trading and mining giant Glencore.

The mainland’s equity benchmark The Shanghai Composite Index added 0.1 per cent for a second day. It gained 2.57 points to 3,395.91.

The CSI 300 Index of big-cap share fell 0.3 per cent while the ChiNext gauge of smaller firms added 0.2 per cent.