Hong Kong stocks end the week at highest in nearly 13 months

Hong Kong stocks continued the week’s winning streak on Friday, buoyed by China’s announcement that it would allow insurance capital into the exchange.

The news lifted the benchmark equity index to its highest in almost 13 months. Mainland Chinese stocks, however, dipped after consumer inflation numbers fell below market expectations, ending a nearly three-week high.

Hong Kong’s Hang Seng Index climbed 0.75 per cent or 180.36 points during the day to close at 24,099.7, after gaining almost all week. The Hang Seng China Enterprises Index, or H-shares index, rose 0.5 per cent or 49.76 points to close at 10,057.97.

Turnover on Friday broke HK$143 billion, past Thursday’s HK$78 billion.

Analysts say Hong Kong stocks will continue to advance next week.

Louis Tse Ming-kwong, a director of VC Brokerage in Hong Kong, said the Hang Seng Index could reach 24,300 to 24,500 points. “In the near term, the index could touch fresh highs,” he said.

Haitong International Security’s sales trading managing director Andrew Sullivan had predicted earlier that the Hang Seng would break through 24,000.

“Expect Hong Kong to see another squeeze higher as Europe comes in and sees the breakout clear through 24,000,” Sullivan said.

Hong Kong’s markets led on gains in the insurance sector, following China Insurance Regulatory Commission (CIRC)’s announcement Thursday that it would allow insurance companies to buy equities in Hong Kong via the Shanghai stock link. Big insurance company winners on Friday included China Life, China Taiping Insurance Holdings, and China Reinsurance, with the sector as a whole rising 1.36 per cent.

CIRC’s announcement was “kind of a booster there” for the market, Tse said. He noted the surge in share turnover during Friday’s trading, adding: “We haven’t seen this for quite some time.”

“There is possible upside from insurers being given access to the Shanghai Connect,” Sullivan said.

Other notable movers included Hong Kong Exchanges and Clearing, operator of the city’s equity and futures markets, which was by far the most heavily traded stock during the day, closing up 5.54 per cent after rising as much as 7.65 per cent, with over 7.4 billion shares changing hands.

There were gains among heavyweights such as HSBC, the world’s fourth largest bank, which rose 0.84 per cent to HK$59.8, and state-owned telecommunications company China Mobile, which reached a 52-week high during the day at HK$99.3 before closing at HK$98, up 1.82 per cent from Thursday.

Macau gaming stocks also rallied, with Melco International Development and Wynn Macau up 7.13 per cent and 4.15 per cent respectively.

Hong Kong’s largest property developer Sun Hung Kai Properties rose 0.90 per cent to HK$121. The company on Thursday reported that core earnings for the 12-months to June climbed 22 per cent from the previous year.

Meanwhile, China markets dropped after consumer price index (CPI) inflation came in at a lower-than-expected 1.3 per cent in August, according to a Goldman Sachs report. This was lower than Beijing’s target of 3 per cent inflation this year, and stemmed from a moderation in food inflation.

Producer price index (PPI) inflation was slightly higher than expected, down 0.8 per cent in August, reflecting “the continued increase in commodity prices in August,” Goldman analysts wrote in a note on Friday.

Mainland markets reacted, with the Shanghai Composite Index down 0.55 per cent or 17.09 points to 3,078.86, while the CSI 300 — which tracks large companies listed in Shanghai and Shenzhen — fell 0.64 per cent to 3,318.04.

The Shenzhen Component Index was down 0.82 per cent to 10,762.79, while the Shenzhen Composite Index slipped 0.74 per cent to 2,035.02. The Nasdaq-style ChiNext Index climbed back from a midday fall of 5.84 per cent to close down 0.92 per cent to 2,202.97.