HONG KONG: Hong Kong stocks broke through the 26,000 level on Wednesday as they headed for their best week in four months. Gains for banks and technology stocks supported the Hang Seng index on Wednesady as it rose for a third day to an intraday high of 26,147.30, its highest level since the Chinese stock market fever in mid-2015. The index was lifted on Wednesday by a 1.3 per cent rise for the financial sector after the People’s Bank of China reportedly injected Rmb 70bn into the banking system. The index is up 2.9 per cent this week, heading for its best weekly performance since the period ending March 17.
Tencent and HSBC, which represent more than 20 per cent of the weighting of the Hang Seng benchmark, have helped to power the market’s rise this year. Tencent is up 48.7 percent for the year to date, while HSBC has gained 25 per cent. Mainland Chinese carmaker Geely Automobile is the best performer on the index, up 149.9 per cent. Mohammed Apabhai, Asia Pacific Trading Strategies Group for Citi, said: “[This is] not yet the high but close to it, we are watching USDHKD and warrant positioning but feel that this is going to be August issue. Liquidity continues to flow in but it is getting tighter – Asia foreign exchange is starting to see selective outflows and credit is priced to perfection.” The Hong Kong dollar has been weakening steadily this year in spite of its strong dollar peag, breaking through HK$7.81 against the dollar for the first time in 18 months on July 3.
The Hang Seng China Enterprises Index, which tracks mainland Chinese blue chips, was up 1.2 per cent on Wednesday with the financial sector up 1.7 per cent. The HSCEI is heading for its best week since May 12 and is up 12.2 per cent for the year to date. Air China is the best performer for the year to date on the HSCEI, up 49.5 per cent.
Hong Kong stocks’ rally has been aided this year by southbound traffic from investors in Shanghai and Shenzhen making purchases through those bourses’ stock connect trading schemes with the Hong Kong stock exchange. While southbound buy turnover is equivalent to just 5.6 per cent of total trading turnover in Hong Kong for the year so far, south and northbound trading often features prominently in sudden share price moves by Hong Kong-listed shares. On Tuesday, when shares in Sunac jumped as much as 14.3 per cent, southbound trade value accounted for nearly half of the daily total.