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Hong Kong - Chinese stocks rose in Hong Kong, with the benchmark gauge headed for its biggest weekly gain since August, as insurers extended a surge amid bets their investment returns will improve.
The Hang Seng China Enterprises Index rose 0.8% as of 08:20. The gauge has rallied 4.3% this week, led by for PICC Property & Casualty and China Life Insurance. China Vanke has climbed 5% after China Evergrande lifted its stake in the company. The Hang Seng Index gained 0.3% on Friday.
Insurers made up more than half of the top 10 gains on the H-share gauge this week. Investors should buy underperforming Chinese insurance stocks because valuations are set to recover as bond yields climb and the nation’s economic outlook improves, Goldman Sachs Group wrote in a note this week.
A weakening yuan has helped insurers post five straight quarters of foreign-exchange gains from overseas investments and operations. The yuan is headed for a third week of declines as the greenback extended its global surge.
“China insurers may continue to be quite strong," said Castor Pang, head of research at Core-Pacific Yamaichi in Hong Kong. “The H-share index may hit 10 000 in the near term helped by insurance and banking stocks, but after that, there should be a very quick pull back. Markets seem to be over-optimistic."
The Hang Seng China Enterprises Index traded at 9 752.45. The Shanghai Composite fell 0.2%, narrowing the price premium of mainland shares over their Hong Kong counterparts to the lowest in more than two weeks. Mainland stocks have shown overbought signals over the past few days, contributing to lower risk appetite by investors, said Gavin Parry, managing director of Parry International Trading.
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