💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

China,HK shares march on; HSI set for best wk in 16-mths

Published 11/05/2010, 01:26 AM
Updated 11/05/2010, 01:32 AM
GC
-
HG
-

* HSI, Shanghai Composite up 1.3 pct on strong turnover

* Hang Seng Index set for best wk since May 2009

* Wharf at record high on HK rents, China expansion

* Financials, commodities boost Shanghai shares (Updates to midday)

By Vikram S.Subhedar and Farah Master

HONG KONG/SHANGHAI, Nov 5 (Reuters) - Hong Kong shares looked set to post their biggest weekly gain since May 2009 at midday on Friday, driven by large-cap financials and commercial property developers, on optimism over earnings growth and underpinned by surging fund flows into the region.

The Shanghai Composite Index rose 1.3 percent to a six-month high and is close to recouping all its losses since Beijing introduced measures to curb property speculation in mid-April.

Hong Kong's Hang Seng Index was up 1.33 percent at a 29-month high of 24,861.68 by the midday break. Its 7.6 percent jump this week has taken it back into technically overbought territory.

Turnover surged to HK$73.2 billion, about 10 percent higher than the average full-day turnover seen in the year to date, with a full afternoon of trading still to go.

A major positive for the market this week was the breakout of the H-share financials sub-index and HSBC Holdings Plc on strong volume. This was significant because six financials and HSBC together accounted for 39 percent of the Hang Seng Index's weighting, said traders at Daiwa Capital in Hong Kong.

HSBC rose 2.9 percent to the highest level in eight months, providing the biggest boost to the broader market as investors finally chased the largest weighted index stocks on optimism that the ongoing rally still has legs.

The Hang Seng Index's relative strength index (RSI) is back up at 76, above the threshold 70 level, after two days of gap up openings for the benchmark. Its RSI had stayed below 70 in the last two weeks of October as the index consolidated gains.

Wharf (Holdings) Ltd jumped 3.6 percent to a record high on optimism that rental demand at the company's Hong Kong properties would remain robust and its China expansion would aid profit growth.

SHANGHAI JUMPS

China's key stock index rose in heavy volume on renewed investor confidence pushed the benchmark past a closely watched resistance level.

The Shanghai Composite Index broke through the 3,100 mark that had capped gains in recent session and was on track to post its highest close in six months. It has gained 5 percent so far for the week.

Analysts said the index may come under pressure to consolidate early next week ahead of China's inflation and trade data, but said they saw the overall upward trend continuing.

Wang Aochao, an analyst at UOB Kay Hian in Shanghai, said he was positive on the year-end outlook for the market.

"It is too early to speak of a bubble in the stock market. You look at large-cap banks, insurers and compared with the same stocks in Hong Kong, there is still a big discount," said Wang.

The Hang Seng A/H premium Index, which measures the valuation differential between mainland stocks and their Hong Kong-listed counterparts, still shows than on average mainland shares trade at a discount.

China banking shares listed in Shanghai, hobbled earlier this year as Beijing cracked down on lending, trade at the biggest discounts to their H-shares.

Industrial & Commercial Bank of China Ltd, up 1.7 percent and the biggest boost to the index, trades at a 31 percent discount to its Hong Kong-listed shares.

Resources gained as a weaker dollar pushed up prices of dollar-priced commodities. The dollar index is down 1.3 percent this week.

Zijin Mining Group Co Ltd gained 5.9 percent. Jiangxi Copper Co Ltd rose 5.8 percent, while Shandong Gold-Mining Co Ltd rose 4.9 percent.

Heavy weighted brokerages and insurers also helped push the index higher, with Industrial Securities Co Ltd up 6.1 percent and China Life Insurance Co Ltd 3.2 percent higher.

Turnover surged to 152 billion yuan ($22.82 billion), up from 117 billion yuan by midday on Thursday. ($1=6.660 Yuan) (Editing by Chris Lewis)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.