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Hong Kong - Chinese stocks in Hong Kong rebounded from a three-week low, led by energy producers and auto companies, amid an increase in oil prices and optimism that China’s central bank will ease policy to spur growth.
The Hang Seng China Enterprises Index climbed 0.9%, with the advance paced by Great Wall and China Shenhua Energy, among the gauge’s biggest decliners in the previous two days.
The Shanghai Composite Index declined for the first time in five days after the benchmark rose toward a technical level seen by some traders as signaling a reversal.
Expectations that China will announce more stimulus to support the economy have helped support a rally in mainland shares this week. Hong Kong shares retreated in the past two days amid concern Britain’s vote to exit the European Union will weigh on the global economy.
Asian equities advanced as investors awaited US payrolls data due on Friday that will be key to judge the Federal Reserve’s policy outlook.
“There is some bargain hunting and some optimism for policy support,” said Daniel So, strategist at CMB International Securities. “But Hong Kong stocks’ outlook will be choppy over the next few weeks because of Brexit and risks in Europe.”
The H shares gauge rose to 8 578.24 as of 07:05, and the Hang Seng Index advanced 0.9%.
China Shenhua Energy climbed 4.6%, while Great Wall Motor gained 4.1%. Both shares fell 5.5% over the previous two days, among the worst performers on the H share gauge. PetroChina and Cnooc added at least 1.7% in Hong Kong as US oil prices rose.
Gold companies rallied, with Zhaojin Mining Industry and Zijin Mining jumping at least 3.6%. Prices of the precious metal climbed to a two-year high as investors sought a haven from the tumult in financial markets, with UBS saying bullion is probably at the start of a bull run.
Shanghai’s retreat
The Shanghai gauge fell 0.4% after its 14-day relative-strength index climbed to 68.3 on Wednesday, the highest level since November, nearing the threshold of 70 that some traders see as a signal a rally is about to reverse.
While the index is still down 15% in the year to date, mainland shares have been relatively insulated from Brexit worries. The Shanghai gauge has climbed 3.9% since the UK referendum to emerge as the world’s best-performing benchmark after Ukrainian equities.
Data on China’s foreign exchange reserves are due on Thursday, while figures set for next week are forecast to indicate a third monthly drop in exports in US dollar terms.
