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HK shares buoyed by risk appetite, China up on earnings

Published 10/13/2009, 01:32 AM
Updated 10/13/2009, 01:36 AM
HSBA
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* Hang Seng index up 1.8 pct, helped by HSBC gains

* Shanghai up 0.8 pct in low turnover, faces resistance

* Wynn Macau rebounds, other casinos down on rules review (Updates to midday)

By Nerilyn Tenorio and Lu Jianxin

HONG KONG/SHANGHAI, Oct 13 (Reuters) - Hong Kong shares picked up pace across the board towards midday Tuesday, gaining 1.8 percent as investors abandoned caution and looked at risky assets again while the U.S. dollar remained weak.

Shares in Shanghai had edged up 0.82 percent by midday as several companies, including top carmaker SAIC Motor, forecast or reported strong earnings, helping to offset pressure from heavy supplies of new shares, including IPOs.

"The market is gaining back its appetite for risk," said Ben Kwong, chief operating officer at KGI Asia Ltd in Hong Kong.

Index heavyweight HSBC Holdings joined the bandwagon of gainers, up 1.1 percent, after its CEO reaffirmed the bank's plan to list in Shanghai next year.

The benchmark Hang Seng Index was up 379.80 points at 21,679.15 at the midday break. Turnover was HK$33.6 billion ($4.33 billion), up from midday Monday's HK$22.7 billion.

The China Enterprises Index of top locally listed mainland Chinese companies was up 2 percent at 12,623.70.

At 0430 GMT, the U.S. dollar index was up 0.07 percent against a basket of major currencies but still near a 14-month low hit last week. Yanzhou Coal advanced 2.43 percent to HK$11.80 after it said late on Monday that it had resubmitted an application to Australian regulators to purchase Felix Resources Ltd . The Foreign Investment Review Board of Australia has yet to decide on its $2.9 billion takeover bid.

Geely Automobile Holdings Ltd rallied to HK$2.52, up 6.78 percent, after it said late on Monday that it posted record sales of 32,053 cars in September, more than double sales in the same month last year and up 40 percent from August.

Wynn Macau reversed its early losses to gain 0.93 percent to HK$10.86. Wynn was down earlier after the former Portuguese enclave said it was considering curtailing the expansion of the fast-growing gambling market.

SHANGHAI

The Shanghai Composite Index rose to 2,918.256 points, reversing a 0.6 percent drop on Monday, although analysts warned against excessive optimism toward the broad market trend.

SAIC Motor added 1.26 percent to 20.88 yuan after it forecast on Tuesday that its net profit in the January-September period jumped more than 70 percent from a year earlier.

Turnover in Shanghai A shares was sluggish, down to a thin 46 billion yuan ($6.74 billion) from Monday morning's 57 billion yuan. Gaining stocks outpaced losers by 610 to 242.

"Investors have recently focused only on individual companies with upside potential, while overall investment in the broad market has been sluggish," said Wu Xiong, research manager at Orient Securities in Shanghai. "Amid a quick expansion of the market with IPOs and other new supplies, we believe the index will continue zig-zag trading with limited potential to rise sharply."

Wu and other analysts forecast the index would face stiff resistance at the 3,000-point level, barring major positive news.

But several traders said some pleasant surprises may await in corporate earnings, amid signs that China's economy is on a strong recovery track. Chinese companies are required to post third-quarter and nine-month results in October.

The semi-official China Business News reported on Tuesday that most economists were forecasting China's gross domestic product growth exceeded 8.5 percent in the third quarter from a year earlier. The data will be announced next week.

Power generator Guangdong Baolihua was one of Tuesday morning's top gainers, jumping 6.26 percent to 9.17 yuan, after it posted a stronger-than-expected 32 percent year-on-year rise in net profit for the first three quarters of the year.

VV Food and Beverage, one of the morning's most active stocks, rose 6.15 percent to 7.94 yuan after it said net profit jumped 280 percent in the first nine months from a year earlier. ($1 = HK$7.75 = 6.825 Yuan) (Editing by Chris Lewis) (Reporting by Nerilyn Tenorio)

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