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Wednesday, September 19, 2012

Hong Kong shares buoyed by BOJ easing, China eyes 1st gain in three days - Reuters

Wed Sep 19, 2012 11:08am IST

(Updates to midday)

* HSI up 1.1 pct, climbs above chart resistance

* H-shares jumps 1.8 pct, Shanghai Comp and CSI300 both up 0.2 pct

* Chinese banks lead charge, commods strong too

* Chinese property weak, hit by Longfor's new share issue

By Clement Tan

HONG KONG, Sept 19 (Reuters) - Hong Kong shares returned to a 4-1/2-month high on Wednesday, helped by Chinese banks that lifted the Hang Seng Index above a chart level that had capped gains since a stimulus-led rally in the previous two weeks.

Gains accelerated after the Bank of Japan (BOJ) announced an expansion of its asset-purchasing programme in an attempt to bolster growth, spurring hopes that China's central bank will also ease monetary policy.

"With the European Central Bank, the U.S Federal Reserve and now the Bank of Japan -- all the world's major central banks -- moving to ease, there will now be expectations for the PBOC (People's Bank of China) to follow suit," said Jackson Wong, Tanrich Securities' vice-president for equity sales.

China's Ministry of Commerce warned earlier in the day that foreign demand is likely to remain weak. Official data on Wednesday showed a 3.4 percent year-on-year fall in foreign direct investment inflows in the first eight months of 2012, adding to a raft of grim economic data.

Mainland Chinese markets, which began a midday break just before Japan's easing move, were set for their first gain in three days. The Shanghai Composite Index and the CSI300 Index of the top Shanghai and Shenzhen listings each gained 0.2 percent at midday.

The China Enterprises Index of the top Chinese listings in Hong Kong jumped 1.8 percent.

The Hang Seng Index ended the morning up 1.1 percent at 20,818.8, its highest level since May 4. Wednesday's gain took it above 20,674.5, the lower end of a gap that opened up between May 4 and 7 and a technical level that stymied gains in the first two sessions this week.

In the past two weeks, investors have been cheered by stimulus moves. Stocks were boosted first by China's announcements on Sept. 6 and 7 of infrastructure projects, and then by the Fed's Sept. 13 unveiling of a third round of quantitative easing.

Market watchers said they believe the Hang Seng Index can have sustained gains after the latest Fed move -- which was not the case after the second round of U.S. quantitative easing was announced in early November 2010. Then, the Hang Seng Index rose almost 8 percent in the first week, but still ended down 0.4 percent that month.

CHINA PLAYS IN FOCUS

On Wednesday, shares of China's biggest banks were among the top boosts to the benchmark indices. In Hong Kong, Industrial and Commercial Bank of China (ICBC) rose 2.5 percent to its highest in a month.

Commodities-related sectors were also stronger. Jiangxi Copper gained 3.4 percent, regaining some of Tuesday's 2.3 percent decline after steep losses in the physical copper markets.

The Chinese non-banking financial sector rose after mainland media reported Beijing said it would aim to maintain security and stability in the securities market. In Shanghai, Haitong Securities and Citic Securities rose more than 1 percent each.

The Chinese insurance sector, seen as a proxy of the mainland markets given their large A-share investments, also firmed. Ping An Insurance gained 1.4 percent in Hong Kong and 0.7 percent in Shanghai.

The Chinese property sector bucked broader market strength, after Longfor Properties said late on Wednesday it will issue $400 million worth of new shares to fund new projects.

Investors did not take well to the dilution of their stakes, sending Longfor's shares tumbling 8.5 percent to their lowest in almost a week, with weakness extending to the entire sector in Hong Kong and mainland China. (Editing by Richard Borsuk)


1 comment:

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