China shares gain as Shanghai-HK stock link launches to great demand

Investing.com - China shares gained on Monday with the launch of the Shanghai-Hong Kong Stock Connect program, but Tokyo slumped on disappointing third quarter GDP figures.

The benchmark Shanghai Composite Index rose 1% intraday, while the Nikkei 225 slumped 2.55% after third quarter gross domestic product in Japan fell 1.6% year-on-year, well below a forecast of a 2.1% gain.

Global investors snapped up a total of 6.9 billion yuan ($1.12 billion) of Chinese stocks in the pre-market session, representing 54% of the $2.1 billion daily quota. After about 45 minutes of trading, 67% of the daily quota was filled.

The Shanghai-Hong Kong Stock Connect trading link opens up mainland Chinese markets to global capital, allowing international investors access to shares traded in Shanghai, while also granting wealthy Chinese individuals access to Hong Kong-listed equities.

Demand for Hong Kong stocks from mainland investors appeared more limited, with just 8% of the quota utilized after the first ten minutes of trading.

The Hang Seng Index opened 0.9% higher before reversing gains to trade down 0.1%.

Last week, U.S. stock indices traded mixed to higher on Friday led by a sell off in the healthcare sector, though expectations that lower oil prices may boost consumer spending offset losses.

The Dow 30 fell 0.10%, the S&P 500 index rose 0.02%, while the NASDAQ Composite index rose 0.18%.

Healthcare stocks fell on Friday as investors sold for profits,locking in several sessions of gains, which brought broader stock indices lower on Friday, though losses were limited.

Data released earlier revealed an uptick in retail sales and consumer sentiment, a sign that falling oil prices have brought down gasoline prices to the point that individuals and families may be seeing more discretionary income.

The Thomson Reuters/University of Michigan's preliminary reading on the overall consumer sentiment index for November hit 89.4, its highest reading since July 2007, beating forecasts for an 87.5 reading.

Also in the U.S., the Census Bureau reported that U.S. retail sales rose 0.3% last month, exceeding expectations for a 0.2% gain, after a 0.3% fall in September.

Core retail sales, which exclude volatile transportation items, increased by 0.3% in October, compared to expectations for a 0.2% slip the previous month.

On Monday, Japan is to publish preliminary data on third quarter gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health.

In the euro zone, Germany’s Bundesbank is to publish its monthly report. Meanwhile, ECB President Mario Draghi is to testify on monetary policy in the European Parliament in Brussels.

Canada is to release data on foreign securities purchases.

The U.S. is to release a report on manufacturing activity in the New York region, as well as data on industrial production.