China shares post best day in seven months, lifting Hong Kong 2.3pc

China shares posted their best daily gain in seven months on Thursday, led by financial and other growth-sensitive sectors after local media reports raised hopes Beijing may launch targeted stimulus measures to boost growth.

Hong Kong markets were also buoyed by dovish comments from US Federal Reserve chairman Ben Bernanke as investors covered short positions in interest rate-sensitive sectors.

The Hang Seng Index climbed 2.6 per cent to 21,353.7 points in its biggest daily gain since Janurary 2. The China Enterprises Index of the top Chinese listings in Hong Kong surged 3.7 per cent.

The CSI300 of the leading Shanghai and Shenzhen A-share listings soared 4.6 per cent, while the Shanghai Composite Index jumped 3.2 per cent. For both, this was their best daily gain since December 14.

The CSI300 has now bounced 15 per cent and the Shanghai Composite 12 per cent from their respective intra-day lows on June 26, which were their lowest since January 2009.

Gains came in the strongest Shanghai volume since March 4, some 71 per cent above average.

Turnover in Hong Kong also jumped, but at US$9.4 billion (HK$72.9 billion) was just a little over its 20-day moving average. Short selling dipped below 10 percent of total turnover in Hong Kong for only the second time in three weeks.

“This could point to more gains ahead, but we have to see what moves Beijing actually makes,” said Cao Xuefeng, a Huaxi Securities’ Chengdu-based analyst.

Late on Wednesday, the official Xinhua news agency quoted China Premier Li Keqiang pledging policy support to help stabilise growth after a visit to Guangxi province to better grasp economic conditions.

“The buying today looked to be very broad-based, with everybody from institutional to retail investors jumping back into the market,” Cao added.

Ping An Bank surged by the maximum 10 percent limit in Shenzhen, and was one of eight CSI300 components to reach the milestone. In Shanghai, Industrial Bank also jumped 10 percent, while China Minsheng Bank spiked 9.9 percent.

New local currency yuan loans extended by China’s big four state-owned banks stood at an unusually large 170 billion yuan (HK$213.4 billion) in the first week of July, the official Shanghai Securities News said on Thursday.

Property counters were also boosted by a report citing unnamed industry players in the official China Securities Journal that authorities could relax rules on financing for listed-real estate developers.

This came after underwhelming economic data had stoked fears that second-quarter growth, a figure Beijing is due to release on Monday, could disappoint.

Investors are also watching for June money supply and loan growth, due by July 15. Monthly urban investment, industrial output and retail sales figures are also expected on Monday.

Poly Real Estate spiked 6.1 per cent in Shanghai after saying it expects first half profit to have risen 35 per cent from a year earlier.

China Resources Cement enjoyed their best day in 10 months, surging 10.6 per cent in Hong Kong after the company said it expected first half profit to significantly increase from a year ago.

Hong Kong property developers posted relatively modest gains after Bernanke shifted his tone late on Wednesday, saying highly accommodative monetary policy for the foreseeable future is needed.

Sun Hung Kai Properties and New World Development each rose less than 2 per cent, while Link REIT (real estate investment trust) gained 2 per cent.