HK shares climb most in a month
Hong Kong’s benchmark equity index climbed the most in a month, with speculation that the US Federal Reserve may rethink any immediate plans to raise borrowing costs adding to optimism spurred by increasing property sales.
TheHang Seng Index added 1.7 percent, the most since July 12. A gauge of property stocks advanced to a one-year high, with Sun Hung Kai Properties Ltd and Sino Land Co leading with gains of more than 3 percent each. The Shanghai Composite Index climbed for a second day, while a measure of small-company shares advanced in Shenzhen.
Hong Kong’s real estate market is especially sensitive to Fed monetary policy, with a currency peg to the greenback ensuring the city’s interest rates follow that of theUS. The odds that the American central bank will increase borrowing costs this month decreased after nonfarm payrolls data released on Friday missed estimates for August. At least one residential project in Hong Kong was sold out over the weekend, while data Friday showed home sales rose to the highest level in at least 14 months in August.
“Hong Kong property sales are still pretty good and, with a lower interest-rate-hike possibility in the US, property stocks may continue their strength from August,” said Linus Yip, aHong Kong-based strategist with First Shanghai Securities. “It’s a critical moment because the Hang Seng Index shot up to new highs and has outperformed global markets in August.”
The Hang Seng Index rose to 23,649.55. The Hang Seng China Enterprises Index climbed 1.5 percent, while the Shanghai Composite closed 0.2 percent higher. The ChiNext index of smallcompany shares advanced 0.6 percent.
The 14-day relative strength measure for the Hang Seng Linus Yip, Index, measuring how rapidly prices have advanced or dropped during a specified time period, was at 75.3 on Monday. Readings above 70 indicate a possible reversal. Sun Hung Kai Properties rose 4.7 percent and Sino Land added 3.6 percent. Tencent Holdings Ltd rose 4.2 percent to a record, reaching a market value of HK$1.99 trillion ($256.5 billion).
China Pacific Insurance Group Co rose 2.7 percent and PICC Property & Casualty Co added 2.8 percent to lead insurers higher inHong Kong. American International Group Inc is looking to raise about $190 million by selling its remaining shares in PICC, according to a media report.
Chinese insurance stocks may continue to rise as firsthalf operating trends of both life and property-and-casualty businesses were stronger than projected, and earnings are expected to improve, Darwin Lam and Michelle Ma, analysts at Citigroup Inc, wrote in a report last week.
a Hong Kong-based strategist with First Shanghai Securities