Hong Kong shares rally

Hong Kong blue chips rose 2 percent on Tuesday as the city's lenders surged after global bank HSBC Holdings plc and its unit Hang Seng Bank reported forecast-beating earnings. Hang Seng Bank's record first-half profit lifted its shares to a life high and fuelled confidence in the sector, sweeping up BoC (Hong Kong) and Bank of East Asia along with the rally.
The Hang Seng financial sub-index jumped 3.1 percent, its best one-day performance in more than five years. Hong Kong-listed shares in mainland companies, or H shares, leapt 2.6 percent as investors brushed off China's widely expected move on Monday to raise the level of deposits that lenders must hold in reserve.
"People are turning optimistic about the banks' profits," said Alex Wong, director at Ample Finance Group. "If you look at the buying behind the banks, this should position the market for more upside. "Hong Kong should be more defensive than other markets," Wong added, citing support from the strong yuan-denominated shares traded in the mainland which hit a record on Monday.
A recovery on Wall Street set the day's tone, paving the way for extended gains in the afternoon. The benchmark Hang Seng Index ended near the day's high, closing up 445.04 points at 23,184.94. The China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, gained 332.90 points to 13,363.96. Mainboard turnover was HK$86.2 billion (US $11.1 billion), topping Monday's HK$80.7 billion.
Heavyweight HSBC was the biggest boost to the blue chips and the day's most traded stock. Hong Kong's top lender vaulted 2.1 percent to HK$144.3 after posting interim earnings that showed its bad debt provisions were not as bad as had been feared.
Hang Seng Bank, the top blue chip gainer, shot up nearly 10 percent to HK$124 in heavy trade after reporting a stronger-than-expected 43.2 percent increase in first-half earnings on Monday, triggering a spate of broker earnings upgrades.
BoC, Bank of China's Hong Kong arm, leapt almost 5 percent to HK$20.30 and Bank of East Asia, due to report its interim earnings on Thursday, ramped up 4.8 percent to HK$47.40.
Financials also led the H shares. Insurers gained further ground, bolstered by China Life's upbeat profit guidance. China Life, the country's top life insurer, climbed 2.3 percent to HK$33.85 and rival Ping An Insurance raced up 5.2 percent to HK$68, having earlier tapped a new high.
PICC Property and Casualty Ltd also set a fresh record, before ending the day up 13.5 percent to HK$10.10. Among mainland banks, China Construction Bank surged 3.5 percent to HK$5.90 and Bank of China rose 2.7 percent to HK$4.16. PetroChina Co Ltd found a toehold a day after its shares sank on news that Warren Buffett was reducing his stake in China's top oil producer. PetroChina shares gained 2.5 percent to HK$11.66.