Hong Kong stocks gain on Italy optimism

Hong Kong - Hong Kong stocks climbed, with the benchmark index poised for its steepest gain in two weeks, as Asian investors joined global counterparts in shrugging off the defeat of Italy’s constitutional referendum.

The Hang Seng Index rose 0.7% as of 1:29 local time, as a gauge of volatility on the benchmark equity index slid to a 1 1/2-year low.

A selloff in Asia spurred by concern about the Italian vote had reversed by the time European markets opened, and the Dow Jones Industrial Average closed at an all-time high in New York.

Volume on the benchmark index was 29% less than its 30-day average at the time of the day, according to data compiled by Bloomberg.

"The news on Italy didn’t create big fluctuations in financial markets, so that’s good for Hong Kong," said Linus Yip, a Hong Kong-based strategist at First Shanghai Securities.

"The market may remain firm but the momentum isn’t that great right now."

Tuesday’s gain helped pare the quarterly loss for Hong Kong’s benchmark equity gauge to 2.7%.

Trading through the exchange link with Shenzhen was muted on the program’s second day, with investors making net purchases of about 311m yuan ($45m) in Hong Kong and 1.25bn yuan in the mainland technology hub. On Monday, eight of traders’ 10 most popular Shenzhen picks declined.

Galaxy Entertainment Group climbed for a second day after plunging on Friday following a report Macau plans to more closely monitor VIPs bringing cash into the gambling enclave.

Hang Lung Properties and Sino Land Company were among companies leading gains on the Hong Kong measure, rising at least 1.6%.

The Hang Seng China Enterprises Index added 0.6%, while the Shanghai Composite Index fell 0.1%. The Shenzhen Composite Index increased 0.2%.

Italy risk

Political risk from Italy hasn’t spread beyond its borders as markets were correctly positioned for the anti-establishment mood sweeping around the world. This was a departure from the Brexit referendum and Donald Trump’s surprise election, when traders were caught out by populist votes.

Huaan Securities Company rose by the 44% limit on the first day of trading in Shanghai following its IPO Geely Automobile Holdings climbed 2% after posting a 99% increase in November sales from a year earlier China Pacific Insurance (Group) Company, China Life Insurance Company and New China Life Insurance Company were among companies leading gains on the Hang Seng China Enterprises Index.

The Shenzhen-Hong Kong stock link will give insurers more channels to invest, First Shanghai’s Yip said.