HONG KONG SHARES BOUNCE TO 7-WEEK HIGH
DATE: 03/07/2012
HONG KONG: China shares gained for a
third day while the benchmark in Hong Kong, which reopened on Tuesday after a
holiday, was Asia's top performer, spurred by hopes of more monetary easing by
Europe's central bank to revive economic growth.
The Hang Seng index rose 1.6 percent to finish the morning session at 19,744, the highest level since its May 15 close. The benchmark managed to rise above its 200-day moving average, currently at 19,554.8, which had proved a stiff resistance last month.
On the mainland, the CSI300 rose 0.8 percent while the Shanghai Composite was up 0.6 percent helped by financials and consumption-related sectors.
"I think we're still seeing some post-EU summit fervour in Hong Kong as well as expectations that the ECB is going to follow through on Thursday by cutting interest rates," said Tom Kaan, a director at Louis Capital Markets in Hong Kong.
"China is still a bit of a mixed bag but as long as central banks are veering towards money-printing, there's going to be support for the market," said Kaan.
A contraction in U.S. manufacturing activity, the first in three years, underscored the grim outlook for the global economy but also raised hopes that the U.S. Federal Reserve will step in with asset purchases to support the economy.
Those expectations were seen helping risky assets with large-caps and beaten down commodity sectors such as coal and steel posting healthy gains.
HSBC Holdings and China Mobile, which both rose more than 1 percent, were the top boosts for the Hong Kong benchmark.
Petrochina was up 0.8 percent in Shanghai while beleaguered shipping stock China Cosco rose 5.9 percent to be the Shanghai index's top performer on the day.
Coal stocks, which have been hit by weaker demand and worries about oversupply, staged a sharp recovery with the largest players China Shenhua and China Coal both rising more than 4 percent. Yanzhou Coal gained 5.2 percent bouncing off last Friday's 2-1/2 year intraday low.
Auto stocks in Hong Kong were stark underperformers, however, as offshore investors reacted to reports on Monday in local Chinese media that Guangzhou became China's fourth city to
cap on annual car sales to help ease a worsening traffic gridlock.
Brilliance Automotive dropped 3.6 percent while Dongfeng Group fell 6.6 percent. GAC Group fell 5.4 percent. BYD fell 1.9 percent while its Shenzhen listing fell a further 2.8 percent.
Other China consumption-related sectors were stronger, however, after brokerage JPMorgan said the valuations for consumer discretionary sector were already reflecting a weak operating environment and any second-half improvement would likely support shares prices.
Excluding sportswear makers, the Chinese consumer discretionary sector trades at a "compelling" 12 times forward-earnings multiple, according to JPMorgan, which prefers the sector over consumer staples.
Golden Eagle and Lifestyle International , both of which were upgraded to "overweight" at the broker, rose 3.8 percent and 4.6 percent respectively.
The Hang Seng index rose 1.6 percent to finish the morning session at 19,744, the highest level since its May 15 close. The benchmark managed to rise above its 200-day moving average, currently at 19,554.8, which had proved a stiff resistance last month.
On the mainland, the CSI300 rose 0.8 percent while the Shanghai Composite was up 0.6 percent helped by financials and consumption-related sectors.
"I think we're still seeing some post-EU summit fervour in Hong Kong as well as expectations that the ECB is going to follow through on Thursday by cutting interest rates," said Tom Kaan, a director at Louis Capital Markets in Hong Kong.
"China is still a bit of a mixed bag but as long as central banks are veering towards money-printing, there's going to be support for the market," said Kaan.
A contraction in U.S. manufacturing activity, the first in three years, underscored the grim outlook for the global economy but also raised hopes that the U.S. Federal Reserve will step in with asset purchases to support the economy.
Those expectations were seen helping risky assets with large-caps and beaten down commodity sectors such as coal and steel posting healthy gains.
HSBC Holdings and China Mobile, which both rose more than 1 percent, were the top boosts for the Hong Kong benchmark.
Petrochina was up 0.8 percent in Shanghai while beleaguered shipping stock China Cosco rose 5.9 percent to be the Shanghai index's top performer on the day.
Coal stocks, which have been hit by weaker demand and worries about oversupply, staged a sharp recovery with the largest players China Shenhua and China Coal both rising more than 4 percent. Yanzhou Coal gained 5.2 percent bouncing off last Friday's 2-1/2 year intraday low.
Auto stocks in Hong Kong were stark underperformers, however, as offshore investors reacted to reports on Monday in local Chinese media that Guangzhou became China's fourth city to
cap on annual car sales to help ease a worsening traffic gridlock.
Brilliance Automotive dropped 3.6 percent while Dongfeng Group fell 6.6 percent. GAC Group fell 5.4 percent. BYD fell 1.9 percent while its Shenzhen listing fell a further 2.8 percent.
Other China consumption-related sectors were stronger, however, after brokerage JPMorgan said the valuations for consumer discretionary sector were already reflecting a weak operating environment and any second-half improvement would likely support shares prices.
Excluding sportswear makers, the Chinese consumer discretionary sector trades at a "compelling" 12 times forward-earnings multiple, according to JPMorgan, which prefers the sector over consumer staples.
Golden Eagle and Lifestyle International , both of which were upgraded to "overweight" at the broker, rose 3.8 percent and 4.6 percent respectively.
POWERED BY: THE ECONOMIC TIMES
www.goldennifty.com
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