HONG KONG, May 20: Hong Kong shares jumped to their highest since early February on Monday, led by Chinese cyclical counters, as investors chased a resurgent mainland China market which looked set for its fourth-straight gain.
The Chinese property sector was also lifted by data on Saturday that showed average new home prices rose in April at their fastest year-on-year pace in two years, albeit at a slower rate in April than in March.
At midday, the Hang Seng Index was up 1.7 percent at 23,474 points, its highest since Feb. 4. The benchmark has now rebounded 9.1 percent from an April 18 low, when it briefly tested its 200-day moving average.
Hong Kong markets were closed on Friday for a holiday.
The China Enterprises Index of the top Chinese listings in Hong Kong jumped 1.8 percent.
On the mainland, the CSI300 of the leading Shanghai and Shenzhen listings rose 1.1 percent, while the Shanghai Composite Index gained 0.9 percent.
Gains in both Hong Kong and China markets are coming in particularly strong volumes. Midday turnover in Hong Kong was at its strongest since mid-March, while Shanghai volume at midday is just 12 percent shy of its 20-day moving average.
‘Investors are catching up to the big gains in other markets while Hong Kong stayed closed on Friday, but the size and volume driving today’s gains are quite surprising,’ said Jackson Wong, Tanrich Securities’ vice-president for equity sales.
China property counters rose after Saturday’s data, shrugging of a report in the official China Securities Journal that the country may expand a property tax trial to several cities this year and may be applied on newly purchased homes.
China Overseas Land climbed 2.8 percent, while China Resources Land jumped 3.5 percent. Poly Real Estate rose 0.8 percent in Shanghai.
Onshore Chinese markets had climbed sharply last Friday, triggering some short covering in Chinese coal counters, traders said. In a note last Friday, Credit Suisse analysts said a plan to restrict low-quality thermal coal imports into China is likely to be ‘mildly positive’ to the domestic market.
Yanzhou Coal jumped 4.5 percent in Hong Kong, paring 2013 losses to 35.9 percent. China Coal climbed 3.6 percent, while China Shenhua Energy jumped 3.8 percent.
China Mengiu Diary surged 10.2 percent to its highest since December 2011 after a Danone Group joint venture agreed to take a stake potentially worth HK$3.6 billion ($463.74 million) in one of China’s largest diary producers.
Tencent Holdings spiked 4.8 percent to another record high, extending gains after its robust quarterly earnings last Wednesday that swelled its stock price to above HK$300, more than the average target price of HK$290.90 among the 34 analysts that cover the stock, according to Thomson Reuters StarMine.
($1 = 7.7629 Hong Kong dollars)
(agencies)
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