Hong Kong shares posted their biggest single-day jump in five months on Monday, rising 3.5 percent as most blue chips rebounded following a Wall Street rally. Though spurred by bargain hunting and short covering, market watchers expect the rally in local shares to stretch a bit further as it follows a 10.3 percent drop on the main index in less than a month.
Local shares slipped 2.6 percent on Thursday on fading hopes for the imminent launch of a stimulus plan from China as well as caution ahead of the typhoon-triggered holiday on Friday. Bucking the broad market trend, shares in Maanshan Iron & Steel tumbled 7.8 percent on Monday after Goldman Sachs cut the stock to sell from buy on concern that steel demand will fall further amid a slowdown in property construction.
The benchmark Hang Seng Index closed 712.73 points higher at 21,104.79 after opening up 1.7percent. Mainboard turnover was almost unchanged at HK$55.6 billion ($7.1 billion) from HK$55.7 billion on Thursday. Index heavyweights anchored gains on the HSI with HSBC Holdings, rising 3.1 percent and China Mobile climbing 3.6 percent. The China Enterprises Index of top locally listed mainland Chinese firms rallied 3.7 percent.
China's second largest lender, China Construction Bank, shot up 3.7 percent after announcing a 71 percent growth in profit, in line with analyst expectations. HSBC upgraded the stock to neutral from underweight on Monday, following the recent decline in its share price. Shares in CCB have slipped more than 13 percent this month as worries over inflation and slowing growth in China weighed down the banking sector.
Shares in the nation's largest bank, ICBC, rallied 4.3 percent after the lender posted a 41 percent increase in net profit in the second quarter. Asia's largest refiner, Sinopec Corp, rose 3 percent, helped by retreating crude oil prices and growing speculation that Beijing may hike prices of petroleum products for the second time this year. Petrochina, which also stands to gain from higher domestic fuel prices, jumped 3.1 percent.
Shares in Yanzhou Coal Mining soared 5.8 percent after the coal miner said on Sunday its net income jumped 160 percent in the first half of 2008 on high coal prices. Shares in offshore oil producer CNOOC advanced 4.3 percent despite a continued correction in global crude oil prices as investors concentrated on the company's first-half earnings due on Wednesday.
CNOOC, an upstream pure play, is expected to post strong net profit growth in the first six months, helped by the record-setting surge in crude oil prices and increased demand. Billionaire Li Ka-shing's flagship conglomerate Hutchison Whampoa rallied 2.9 percent following a series of target price upgrades and increased earnings estimates from major brokerages.
On Thursday, the company beat analyst estimates, nearly tripling its underlying profit in the first half, thanks to a strong showing at its Canadian unit Husky Energy and improved third-generation (3G) network business. The stock ended 1.3 percent lower on Thursday following a sell-off in the broad market ahead of Friday's typhoon holiday. Hong Kong's largest air carrier, Cathay Pacific Airways climbed 5.2 percent as crude oil prices continued to slide on Monday after posting their biggest drop since December 2004 on Friday.
Top insurer China Life rallied 3.2 percent while China Unicom, the nation's second largest wireless service carrier gained 4.4 percent. China Netcom, the nation's second-largest fixed-line service provider, put on 4.2 percent. The company, which is set to be merged with China Unicom, announced a 5.2 percent decline in first half earnings on Monday.
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