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Shanghai - China’s stocks jumped the most in nearly four months in Hong Kong, led by financial and construction-related companies, as mainland investors extended a buying spree following last week’s holidays.
The Hang Seng China Enterprises Index climbed 2.% at 07:46, heading for its biggest gain since May 25. Agricultural Bank of China led gains by lenders, while CGN Power rallied the most in a week.
The H-share gauge tumbled 4.6% last week, the largest loss in four months, as traders scaled back bets for new stimulus by global central banks. Hong Kong’s markets were closed Friday for a holiday, while those in the mainland were also shut on Thursday. The Shanghai Composite Index added 0.6%.
Net daily buying of Hong Kong equities through an exchange link with Shanghai reached the highest since April 2015 on September. 9 as cheaper valuations and the wish to protect against a depreciating yuan lured investors. Dual-listed shares are 19% more expensive in the mainland than in the former British colony.
“Mainland buying will probably continue in following months as concern about a weaker yuan is rising,” said Ken Chen, a strategist at KGI Securities in Shanghai. “Low valuations of Hong Kong stocks also make them a preferred target by global investors.”
The Hang Seng China Enterprises Index rose to 9 811.10. The gauge trades at 8.4 times earnings, compared with 21 times for the MSCI All-Country World Index. The Hang Seng Index added 1%.
Nuclear plant
CGN Power climbed 3%, extending Thursday’s gain after the UK government approved Electricite de France SA’s plan to build two nuclear reactors for £18bn in southwest England. CGN Power is a unit of state-owned China General Nuclear Power, which is due to provide a third of the finance for the project.
China Longyuan Power and Huaneng Power International Inc. advanced at least 2.3% in Hong Kong. China’s power consumption growth accelerated 8.3% in August from a year earlier, compared with a rate of 8.2% in July and 2.6% in June, according to the National Energy Administration.
China High Speed Transmission Equipment surged 14% in Hong Kong after Fullshare said it will buy the company in a deal valued at $2.3bn. Fullshare shares climbed 5.5%, poised for a record high.
“A rebound in the economy has helped the power industry,” said Wu Kan, a fund manager at JK Life Insurance in Shanghai. “There’s some sign of an inflection point for the industry.”
Inflection point
China is seen keeping its deep pockets open in the second half and through 2017, despite having front-loaded spending earlier this year, as fiscal policy takes over from broad monetary easing as the major prop to growth. The central government’s fiscal deficit will surpass the target of 3% of gross domestic product set for 2016, according to economists surveyed by Bloomberg News.
New-home prices, excluding government-subsidized housing, gained last month in 64 of the 70 cities the government tracks, compared with 51 in July, the National Bureau of Statistics said Monday.
“The housing price data look good, but that’ll raise concern that policies will be further tightened,” said KGI Securities’s Chen.
The eastern city of Hangzhou tightened some house purchase rules, asking developers and real estate agencies not to sell homes in some urban areas to non-local residents or non-residents who own an apartment already, according to an official statement.
