Hong Kong blue chips jumped 1 percent on Tuesday, led by China Mobile and large-cap property shares, while mainland financials lifted China plays as mainland-listed A shares ended a five-day losing streak.
"People are less worried about China now," said Andrew Sullivan, head of sales trading at Daiwa Securities. "There's a sense that China just wants to control the market rather than decimate it." The benchmark Hang Seng Index closed up 199.58 points at 20,655.20 on turnover of HK$50.3 billion (US $6.4 billion), up slightly from Monday's HK$47.9 billion.
The China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, gained 0.2 percent to 9,621.15. China's main stock index closed up 2.4 percent. "Most H shares like China Life and other heavily weighted stocks have hit bottom - these stocks are now close to their fair value," said Castor Pang, strategist at SHK Financial Group.
"In the short-term, volatility will still be quite high. The direction is not clear at the moment. Investors are waiting for the earnings results," Pang said. Among mainland financial stocks, China Life gained 0.7 percent to HK$22.95 and China Construction Bank climbed 1.1 percent to HK$4.63.
China Mobile, the biggest lift to the blue chips, vaulted 3.1 percent to HK$75.75. Large-cap property shares resumed their climb, with the Hang Seng property sub-index gaining 0.9 percent.
Cheung Kong jumped 1.4 percent to HK$106.3 after saying it aimed to sell between 3,500 to 4,000 new residential units in 2007 worth at least HK$12 billion in revenue. Sun Hung Kai Properties Ltd rose 1.4 percent to HK$99.15.
Mengniu Dairy, the day's third-most active issue, sank 2 percent to HK$21.95 after shareholders in the top Chinese milk producer sold US $175 million worth of shares at a discount of 6.25 percent, sources close to the deal said on Tuesday.
China Shipping Container Lines (CSCL) rallied to 15-month highs before ending up 7.4 percent to HK$2.91, a day after Credit Suisse upgraded shipping stocks across Asia to "overweight."
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