HK, China shares rally on optimism; HK banks shine

Published: 17 Sep 2009 01:36:42 PST

* HK benchmark index sets high for year above 21,900 pts

* Banks lead rise with HSBC up 4 pct to new high

* China stocks up 2 pct ahead of national day holiday (Updates to close)

HONG KONG, Sept 17 - Hong Kong shares rose on Thursday to close at a high for this year, with China shares also higher, tracking firmer markets overseas and fuelled by ample liquidity and optimism for more positive economic data.

Sentiment in Shanghai stayed positive on hopes for stable government policy ahead of the week-long National Day holiday from Oct 1. Hong Kong's benchmark index set a new high for the year above the 21,900-point level after rising as much as 2.46 percent intraday. Shanghai's key index closed 2.02 percent higher to above the key psychological level of 3,000 points.

Brokers said U.S. dollar weakness and a market awash with liquidity gave local stocks a push, with confidence in economic recovery also stronger.

Banks in Hong Kong continued to lead gains with index heavyweight HSBC up 4.06 percent at HK$90.95, a high for this year. ICBC rose 1.3 percent to a year high of HK$6.23 and China Construction Bank was up 0.5 percent at HK$6.48.

"The market was up about 1,000 points in the last two days and it pulled back a bit from a high this afternoon as players locked in gains," said Andrew To, a sales director at Tai Fook Securities. "I would not put a bet for further upside after the recent rally."

The benchmark Hang Seng Index rose 1.71 percent, or 365.59 points, to end at 21,768.51. The China Enterprises Index, which represents top locally listed mainland Chinese stocks, was up 1.14 percent at 12,668.25.

Turnover increased to HK$84.66 billion (US$10.9 billion) against HK$69.9 billion on Wednesday.

Riding on the market strength, cash-strapped Cathay Pacific Airways rallied 5.5 percent to end at HK$13.04 after Hong Kong's flagship carrier said it was selling shares in aircraft maintenance unit HAECO and six Boeing aircraft currently on order to boost its capital.

The airline, Asia's No.4 carrier, is expected to post a one-time gain of HK$1.27 billion from the deal to help finance its capital spending requirements for new aircraft, which are estimated at HK$4 billion this year and HK$7 billion in 2010.

Steel-to-property conglomerate CITIC Pacific Ltd <0267.HK> gained 2.5 percent on reports it aimed to list in China, joining other top Hong Kong-listed Chinese companies that are looking to list in their home market.

Sun Hung Kai Properties rose 3.27 percent to HK$116.70 as analysts focused on the developer's 2010 prospects, assuming underlying residential, retail and office rental growth.

Chinese gold miner Zijin Mining rose 2.6 percent as gold hit an 18-month high of $1,023.85 on Thursday, close to its record peak of $1,030.80 per ounce.

SHANGHAI RISES AHEAD OF NATIONAL DAY

China's key stock index ended up 2 percent on Thursday at a more than one-month closing high, with energy shares active, bolstered by hopes of economic recovery and stable government policy ahead of the National Day holiday.

The Shanghai Composite Index closed at 3,060.260 points, after fluctuating around its key psychological level of 3,000 points and falling 1.1 percent on Wednesday.

Gaining Shanghai A shares outnumbered losers by 817 to 119, while turnover remained active at 178 billion yuan ($26 billion) against 168 billion yuan on Wednesday.

A senior government economist said on Thursday that China's economy may regain double-digit annual growth in the fourth quarter of this year.

"Turnover was active suggesting the underlying sentiment is strong in some sectors and stocks. The situation looks sound, supported by steady economic recovery," said Chen Huiqin, senior analyst from Huatai Securities in Nanjing.

The index may soon test resistance at its 60-day moving average of 3,086 points and would mainly fluctuate between 3,000 and 3,100 points, analysts said.

They said sentiment would largely stay positive as investors expected the authorities to keep policy stable ahead of the country's week-long National Day holiday starting on Oct. 1.

China would maintain its "appropriately loose" monetary policy into next year, domestic media on Thursday cited a central bank official as saying.

"Policy will be kept stable before the October holiday so the index could advance mildly," said Qian Xiangjing, chief analyst from CITIC-Kington Securities in Hanzhou.

Qian added that corporate fundraising may drain money from the stock market and weigh on sentiment after celebrations to mark the 60th anniversary of the founding of the People's Republic of China.

Oil refiners were firmer with Sinopec climbing 2.91 percent to 12.37 yuan as U.S. crude futures steadied above $72 per barrel on Thursday.

Coal shares were strong with China Shenhua Energy advancing 3.36 percent to 34.74 yuan after saying it produced 17.9 million tonnes of coal in August, up 13.3 percent from a year earlier, with sales up 8.3 percent to 20.9 million tonnes.

Metal stocks were firmer, with Aluminum Corp of China (Chalco) gaining 1.69 percent to 15.07 yuan after its parent Chinalco said late on Wednesday it would start construction of a $2.2 billion Peruvian copper mine Toromocho in early 2010 and begin production in the last quarter of 2012.