Hong Kong stocks rise most in three weeks on strength of US and mainland equities

Hang Seng Index has recovered almost half of the loss after falling from a 10-year high on November 22

PUBLISHED : Wednesday, 13 December, 2017, 9:35am
UPDATED : Wednesday, 13 December, 2017, 10:17pm

Hong Kong’s Hang Seng Index posted its biggest gain in three weeks, as US stocks’ rise to records and a rebound in mainland equities added impetus to the city’s shares.

The benchmark rose 1.5 per cent, or 428.22 points, to 29,222.10 on Wednesday at the close for the biggest advance since November 21. The Hang Seng China Enterprises Index, or the H-share gauge, added 1.8 per cent. Trading volumes on the exchange were 19 per cent lower than the 30-day average, according to data compiled by Bloomberg.

The Dow Jones Industrial Average and the S&P 500 Index rose to record closes in overnight trading ahead of a possible interest rate increases by the Federal Reserve that was due to conclude its two-day policy meeting on Wednesday US time. A 0.7 per cent rebound on mainland’s Shanghai Composite Index also helped to court buying interest in the Hong Kong market.

The Hang Seng Index has recovered almost half of the loss after the gauge fell from a decade high of 30,003.49 on November 22. Investors had cashed out of the year’s best-performing stocks including Geely Automobile Holdings and AAC Technologies Holdings to lock in hefty gains, as uncertainty of rising US borrowing costs and increased deleveraging in mainland’s financial markets set in.

“The rally is mostly due to the technical factors after the recent correction,” said Ken Chen Hao, a strategist at KGI Securities in Shanghai. “Good sentiment from both the US and the mainland markets helped the market to stage a rebound. But it will probably be hard for the index to surpass the previous high immediately and the market will probably move back to a fluctuating mode.”

The gains were broad-based, as all the four industry groups of the Hang Seng Index rose, with the financial sector being the best performer. China Construction Bank jumped 4.4 per cent to HK$6.93, contributing the biggest gain to the benchmark. HSBC Holdings added 2 per cent to HK$79.95 and Industrial and Commercial Bank of China climbed 3.3 per cent to HK$6.20.

Macau’s gaming stocks also advanced. Galaxy Entertainment Group surged 5.7 per cent to HK$61.00 and Sands China jumped 5.1 per cent to HK$41.35.

On the mainland, the Shanghai Composite Index gained 22.22 points to 3,303.04. The CSI 300 Index of big-cap companies rose 0.9 per cent and the ChiNext gauge of smaller firms added 0.4 per cent.

Consumer-staples companies, the year’s best-performing sector, led the rebound with 2.8 per cent gain on Wednesday. Liquor maker Luzhou Laojiao advanced 4.5 per cent to 65.74 yuan and Wuliangye Yibin climbed 3.2 per cent to 74.15 yuan. The sub-index of consumer companies has advanced 75 per cent this year.