Hong Kong’s main stock index hits 18 month-high after Wall Street rally

Hong Kong stocks recorded their best close in 18 months after heavy trading volume on Thursday as capital continued to flow into the city following record highs on Wall Street overnight.

The benchmark Hang Seng Index climbed 0.47 per cent or 112.83 points higher to 24,107.70, the highest since August 2015 and the first close above 24,000 since September last year.

The Hang Seng China Enterprises Index edged up 0.18 per cent or 18.98 points to 10,455.02.

Turnover reached a robust HK$108 billion, breaking the HK$100 billion mark for the second day in a row, almost double the daily turnover in January.

Kingston Lin King-ham, director at securities brokerage AMTD, said strong fundamentals, such as improving global growth, had fuelled investor optimism in the past two days.

“Hong Kong shares are rising together with their mainland and US peers,” he said. “Money continues to come in, and the growth sentiment will stay for a while.”

On the mainland, the Shanghai Composite Index closed 0.52 per cent higher at 3,229.62, and the blue-chip CSI 300 was up 0.56 per cent to 3,440.93.

The Shenzhen Component Index added 0.75 per cent to 10,253.96, while the tech-heavy startup index ChiNext rose 0.28 per cent to 1,897.63.

Chinese banks extended their gains after data published this week showed new loans on the mainland rose to their second-highest level in history last month. China Construction Bank (CCB) rallied 2.87 per cent to HK$6.45 following a 5 per cent jump on Wednesday. The Bank of Communications climbed 1.62 per cent to HK$6.28 while the Bank of China (BOC) was up 1.51 per cent to HK$4.03.

Hannah Li, an analyst for UOB Kay Hian, said abundant capital from mainland and overseas investors had contributed to the strong momentum.

The bank rallies also reflected easing concerns on bad loans and earning declines, she added.

A new report from Morgan Stanley forecasted more rises for CCB, BOC, Agricultural Bank of China, China Merchants Bank, and Chongqing Rural Commercial Bank in the next two months.

“I expect some gains, too, by Chinese telecoms and technology companies, as they have fallen behind other sectors at the moment,” said Li. “Green and new energy stocks also have the potential to rise.”

Among the losers, Lenovo tumbled 6.69 per cent to HK$4.88 after it posed a 67 per cent drop in third-quarter net profit, missing analyst estimates.

Dadi Education Holdings, which helps students register for overseas studies, ended below its offering price of HK$0.34 in Hong Kong’s only initial public offering for the day.

Overnight, all three major US indices hit record highs for a fifth-straight day as investors continued to bet on President Donald Trump’s proposed tax-cutting measures.

Robust US economic data also helped. The country’s consumer price index rose 0.6 per cent in January, the largest monthly gain since February 2013.

With the sound economic data, the market has been expecting quicker interest rate rises. On Tuesday, US Federal Reserve Chair Janet Yellen said it would be “unwise” to wait too long to raise rates as economic growth continues and inflation rises. But she also expressed uncertainty over economic policy under the Trump presidency.

The Dow Jones Industrial Average rose 107.45 points, or 0.52 per cent, to 20,611.86. Trump’s tax cut plan drove the S&P 500 to a seven-day winning streak, the first in three years.

On Wednesday, the S&P 500 added 0.50 per cent or 11.67 points to 2,349.25 and the Nasdaq Composite increased 36.87 points, or 0.64 per cent, to 5,819.44.

Other Asian markets traded mixed on Wednesday. Tokyo’s Nikkei 225 lost 0.47 per cent to 19,347.53 on a stronger yen. Australia’s S&P/ASX 200 gained 0.12 per cent to 5,816.31 while South Korea’s Kospi dropped 0.1 per cent to 2,081.84.

Additional reporting by Celia Chen