The Hang Seng Index rose 1.6 per cent to 18,831. 64 as of 11.15am local time, on track for its highest close since August 11. Since Monday, the 82-member benchmark has climbed 1.7 per cent, its third straight weekly gain. The Hang Seng Tech Index slipped 0.5 per cent and the Shanghai Composite Index fell 0.1 per cent.
Optimism is growing that China’s recovery will gather further pace after two key cities of Hangzhou and Xian scrapped all restrictions on home purchases, and both imports and exports beat projections last month. A Politburo meeting chaired by Communist Party boss Xi Jinping at the end of April vowed to tackle the crisis on the property market.
“The recovery in China’s fundamentals is continuing and corporate earnings are bottoming out,” said Song Yiwei, an analyst at Bohai Securities in Tianjin. “Meanwhile, expectations that the Fed will cut interest rates in September have been growing. All these factors are driving re-rating of Chinese stocks.”
The Hang Seng Index has extended its world-beating run since April, and has risen nearly 6 per cent this month, as mainland China’s securities regulator pledged support by expanding the exchange link programme with the city and lifting the quality of listings.
China Construction Bank jumped 6.6 per cent to HK$5.63 and peer Industrial and Commercial Bank of China surged 5.1 per cent to HK$4.57, while China Resources Power soared 5 per cent to HK$20.90. Speculations are swirling that the China Securities Regulatory Commission and the State Taxation Administration are mulling a proposal that will waive a 20 per cent dividend tax on the stocks mainland investors buy via the exchange link programme.
Markets across Asia rallied this morning after the US jobless claims topped estimates to rise to the highest since August, hinting at a cooling jobs market that could justify a cut in interest rates by the Fed. Japan’s Nikkei 225 climbed 0.6 per cent, while South Korea’s Kospi and Australia’s S&P/ASX 200 both added 0.5 per cent.