China stocks jump amid global rally on Fed minutes
Fed decision due after December 15-16 meeting
Hong Kong and mainland Chinese stocks both closed significantly higher on Thursday, adding to a global stock rally after minutes from the US Federal Reserve’s October meeting sent a stronger signal about a possible December rate increase.
The Hang Seng Index advanced 1.4 per cent to close at 22,500.22, with the Hang Seng China Enterprises Index up 1.4 per cent at 10,193.11.
Over on the mainland, the Shanghai Composite Index also rose 1.4 per cent to 3,617.06, and the large-cap CSI300 added 1.6 per cent to end at 3,774.97. Shenzhen markets, dominated by small and medium-sized stocks, snagged bigger gains. The Shenzhen Composite Index jumped 3.1 per cent to 2,257.21. The ChiNext Index surged 4.1 per cent to 2,770.75.
US stocks posted sizeable gains overnight after minutes of the Fed’s October meeting showed most policymakers were willing to increase interest rates in December.
Elsewhere in the region, Japan’s benchmark Nikkei ended up 1.1 per cent and the broader Topix 1000 index closed 0.9 per cent higher. South Korea’s Kospi index rose 1.3 per cent and Australia’s S&P/ASX 200 climbed 2.1 per cent.
“Market participants probably felt relief that the uncertainty concerning the timing of the ‘will-they-or-won’t-they’ rate hike may be coming to an end soon,” said Bernard Awe, a Singapore-based analyst for IG Group.
Looking ahead, he said, investors may also be waiting for the November US jobs report to assess if the better-than-expected October report was a “fluke”, as another strong reading about the US labour market will build confidence for the Fed to act.
Angus Nicholson, a strategist from IG Group, said the signal sent by the Fed was seen as “very bullish” for equities, in particular financial stocks, as their margins are expected to improve from an interest rate rise.
Sentiment in China also received a boost after statistics showed mainland markets’ daily margin-financing balance rose for a 12th straight day on Wednesday to a fresh three-month high of 1.198 trillion yuan.
Turnover in Hong Kong stood at HK$67 billion, versus HK$64 billion on Wednesday. In Shanghai, 328 billion yuan worth of shares changed hands, compared with 330 billion yuan in the prior session.
Bank stocks rose sharply in Hong Kong, after Beijing injected 20 billion yuan into the money markets via seven-day reverse repurchase bond agreements. China Construction Bank jumped 2.6 per cent to HK$5.54, Industrial and Commercial Bank of China advanced 2.1 per cent to HK$4.85, and Sino-British banking giant HSBC Holdings notched up a 1.6 per cent gain.
Hong Kong Exchanges & Clearing, the city’s sole bourse operator, advanced 1.4 per cent to HK$208, after a Bloomberg report quoted the company’s executive as saying that the exchange plans to launch future contracts to track valuation gaps between mainland Chinese shares and their Hong Kong-listed stocks.
Hong Kong property stocks also advanced, with Link Real Estate Investment Trust up 2.1 per cent at HK48.15, Sino Land up 2 per cent at HK$11.7, and Swire Pacific higher by 1.2 per cent to HK$87.3.
Private auto maker Geely Automobile rose 5 per cent to HK$4.17, after the company announced a plan to develop new-energy vehicles and make them account for 90 per cent of its sales by 2020.