Hong Kong stocks near four-week highBusiness | Avery Chen and Tereza Cai 12 Jun 2019
Hong Kong stocks extended Monday's gains with the Hang Seng Index rising 210 points to 27,789 yesterday, led by insurance stocks, banking, and infrastructure sector and supported by the good performance of A shares on stimulus from the mainland government.
The SSE Composite Index rose 2.58 percent to 2,926 while SZSE Component Index increased 3.74 percent to 9,038 after China said that it will allow local governments to use proceeds from special bonds as capital for major investment projects in a bid to support the slowing economy.
The HSI once touched a four-week high at 27,857 intraday in Hong Kong.
The infrastructure sector rallied with China Railway Group (0390) spiking 7.81 percent to HK$6.21 and China Railway Construction Corporation (1186) rising 7.23 percent to HK$10.08.
Raw material stocks rose. Anhui Conch Cement (0914) increased 4.78 percent to HK$47.10 while China National Building Material (3323) rose 7.14 percent to HK$6.45.
Securities shares also fared well, with China Galaxy Securities (6881) rising 7.75 percent to HK$4.45, and Haitong Securities (6837) surging 7.73 percent to HK$8.64.
The largest gainer among the blue chips was China Mengniu Dairy (2319) which rose 3.21 percent to HK$30.75, while the largest percentage loser was mainland developer China Overseas Land & Investment (0688), which fell 1.06 percent to HK$28.
Index heavyweight Tencent (0700) rose 0.47 percent to HK$344.60, and Tencent-backed online literature platform operator China Literature (0772) increased 7.72 percent to HK$33.50 as it unveiled a proposal to repurchase its shares.
Shares of Hong Kong Exchanges and Clearing (0388) were up by 2.64 percent at HK$264.80, after reports that Alibaba plans to file a formal listing application with the Hong Kong stock exchange as soon as the next few weeks.
Citibank expects turnover in the local bourse increase as much as 15 percent if Alibaba lists in Hong Kong.
The Fundsupermarket.com expects Chinese and Hong Kong stock markets to bottom out in the fourth quarter this year, supported by stronger-than-expected fiscal and monetary policies in China and low price-to-earnings ratios.
The online investment platform has set the targets of the HSI at 34,000 points with PE ratio of 12.5 times and Hang Seng China (Hong Kong-listed) 100 Index at 11,000 next year.
Will Shum, director of portfolio management and research, expects the Hang Seng Index will trade between 27,000 to 29,000 this year. He said that if the Sino-US trade war escalates further, the benchmark will only see 32,800 next year.
Everbright Sun Hung Kai meanwhile has set its target range of the HSI to between 25,000 and 30,000 for the second half this year due to reasonable valuations and trade uncertainties.
It forecasts the Shanghai Composite Index to trade between 2,700 and 3,200, and the Hang Seng China Enterprises Index between 9,700 to 12,000.