Mainland H shares head toward five-month high
Hang Seng China Enterprises Index poised for highest close since Sept
A measure of mainland shares traded in Hong Kong headed towards a five-month high, led by property developers and carmakers amid optimism their earnings outlook will improve.
The Hang Seng China Enterprises Index advanced 1.1 percent on Wednesday, poised for the highest close since early September. A gauge tracking Chinese mainland real estate companies jumped by 5.3 percent to the highest in more than four months.
Hong Kong’s benchmark Hang Seng Index added 0.7 percent to 23,485.13 on Wednesday, with Hong Kong Exchanges & Clearing Ltd surging in afternoon trade. The Shanghai Composite Index ended the day
0.4 percent in the black.
China’s property developers are in far better shape than their rock-bottom stock valuations indicate, according to analysts from firms including Goldman Sachs Group Inc and Citigroup Inc China Evergrande Group, China Vanke Co and Country Garden saw contracted sales jump by 90 percent, 274 percent and 75 percent in January, respectively, according to private data provider China Real Estate Information Corp.
Van Liu, an analyst at Guotai Junan Hong Kong Ltd, said: “Property developers are expected to outperform in the near term. January sales of listed developers were better than expected.”
The Great Wall Motor Co rallied by 5.6 percent and BYD Co jumped by 4.9 percent, leading gains on the Hang Seng China Enterprises Index. Geely Automobile Holdings Ltd advanced by 2.9 percent. Consensus earnings estimates have been raised for both last year and this year for most Chinese carmakers, according to a note by Bloomberg Intelligence.
Mainland insurers extended their rally in Hong Kong, with China Taiping Insurance Holdings Co gaining 2.9 percent, as analysts bet that local pension fundsmay soon enter the stock market, and as higher borrowing costs would boost investment yields.
China will soon hold an annual meeting on the supervision of the securities markets, the China Securities Journal reported. Regulators may fine-tune policies on equity financing, the report cited unidentified industry participants as saying.
A billboard displays the morning trading on the first day of trade after the Lunar New Year at the Hong Kong Exchanges.