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

HK shares rise as financials play catch-up, Shanghai flat

Published 01/13/2011, 12:50 AM
Updated 01/13/2011, 12:52 AM

* Hang Seng Index rises 0.5 percent, Shanghai flat

* HSBC, Chinese banks support Hang Seng Index

* Programme trading inflows active in Hong Kong - traders

* Steel companies, brokerages see profit-taking in Shanghai (Updates to midday)

By Vikram S.Subhedar and Chen Yixin

HONG KONG/SHANGHAI, Jan 13 (Reuters) - Hong Kong shares rose on Thursday, extending their weekly gains to more than 5 percent as broad buying of large caps, in particular laggard financials, by funds helped lift the market.

Hong Kong's benchmark Hang Seng Index was up 0.5 percent at 24,247.22 by the midday trading break, supported for a second day by heavyweight HSBC Holdings Plc, which climbed 1.2 percent on more than twice its average 30-day traded volume.

"We're seeing large programme inflows into the region," said a Hong Kong-based trader at a large U.S. investment bank, referring to trading in an entire portfolio of stocks rather single stocks, often done electronically.

Mainland banking counter, which have lagged the broader market, were seen catching up as healthy turnover on the Hong Kong stock exchange suggested the latest gains had momentum.

While HSBC provided the biggest boost to the broader market, China Construction Bank Corp rose 2.1 percent, and Industrial and Commercial Bank of China Ltd (ICBC), gained 2.2 percent, helping the financial sub-index outperform.

China's largest lender, ICBC, said it would not conduct further fundraising from the capital markets within three years, the Securities Times reported, citing the bank's chairman.

Still, concerns about the exposure of mainland banks to local government funding vehicles and the impact of weakness in the property market are likely to cap their gains.

"We still don't know how these banks will perform in a credit down cycle, so there's no real way to tell which banks are the really weak ones," said Nicholas Yeo, head of China and Hong Kong equities at Aberdeen International Fund Managers.

Yeo said he preferred Hong Kong-based banks such as Standard Chartered Plc and Wing Hang Bank Ltd, both of which are among the top holdings in his portfolio.

Expectations of rising food prices in China was helping producers, said traders, while the increase in raw materials was hurting those whose margins would get eroded such as Tsingao Brewery Co Ltd, which fell 2.2 percent.

Tsingtao, founded by German settlers in China more than 100 years ago and which imports barley from flood-affected Queensland in Australia, has been hit by rising barley as well as sugar prices.

SHANGHAI FLAT AS PROFIT-TAKING SEEN

China's key stock index was flat ay midday on Thursday as investors took profit in large caps such as steel and securities issues after a rally in recent sessions.

Analysts also said a 7 percent fall by Sinovel Wind Group Co Ltd in its Shanghai trading debut also weighed on sentiment. It was the biggest loser in the Shanghai market.

The benchmark Shanghai Composite Index inched up to 2,821.5 points after a 0.6 percent rise on Wednesday. It remains above the 125-day moving average, now at 2,775, a level that is expected to provide support in the near term.

"Any new (monetary) policy is unlikely ahead of economic data (due on Feb. 20) and the Lunar New Year holiday," said Chen Shaodan, a senior analyst at China Development Bank Securities in Beijing.

Analysts widely predicted the index to move in a narrow range around the key level of 2,800 points.

Industrial Securities Co Ltd, the second-biggest decliner in the Shanghai market, dropped 6.6 percent because of the expiry of the lock-up period for shares owned by institutional investors following its IPO.

Almost all steel companies retreated. Guangzhou Iron and Steel Co Ltd was down 3.8 percent and Xining Special Steel Co Ltd dropped 2.4 percent.

Software companies outperformed after China's state council said it was planning new measures to promote the software and integrated circuit industries.

SVA Information Industry Co Ltd, the biggest gainer on the Shanghai market, nearly jumped by its 10 percent daily limit, and Shanghai Baosight Software Co Ltd, advanced 6.1 percent. (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.