Hong Kong blue chips rallied 2.7 percent to their fourth-straight record on Monday, as shares in Hong Kong Exchanges and Clearing Ltd (HKEx) jumped amid robust fund flows and Chinese resource counters gained on the back of high oil and gold prices.
Ample fund flows pushed mainboard turnover to its highest level ever, with Hong Kong-listed shares in mainland companies jumping 4.5 percent as oil and gold stocks climbed. PetroChina surged 10 percent to close at HK$14.30, just a hair below its all-time high hit in late trade, amid expectations that Asia's top oil and gas producer will get approval for a domestic listing in Shanghai.
Stock gains were mainly fuelled by fund flows ahead of an anticipated influx of liquidity from China as Beijing is expected to allow mainland Chinese to buy Hong Kong-listed securities directly for the first time.
"Negative real interet rates in China also encourage buying of stocks and Beijing is expected to gradually allow more mainland money to come and buy into the Hong Kong market," said Ben Kwong, associate director at KGI Asia Ltd.
The benchmark Hang Seng Index finished up 708.16 points at 26,551.94, a record closing high. The China Enterprises index of H-shares, or Hong Kong-listed shares in mainland companies, surged 712.38 points to a record close of 16,406.04. Mainboard turnover was HK$140.04 billion ($18 billion), topping last Wednesday's previous record of HK$138.7 billion.
Hong Kong Exchanges and Clearing Ltd ended up 8.8 percent at HK$238.40 after hitting a record of HK$248.40 on hopes that it would benefit from China's plans to allow individuals to buy Hong Kong stocks. "The Hang Seng could test 28,000 by the end of the year," Kwong said.
But China Eastern erased an 8 percent gain to finish down 10.5 percent as expectations waned that Cathay Pacific would buy part of the Shanghai-based carrier. The stock had gained 50 percent in the past week amid market speculation that Cathay would team up with its strategic partner Air China to invest in China Eastern, a move that could derail rival Singapore Airlines Ltd's deal to acquire a stake in the mainland carrier.
Swire Pacific, Cathay's biggest shareholder, eased 0.99 percent to close at HK$94.80 after hitting a record high of HK$99.00 earlier in the day. Chinese resource stocks attracted buyers, with Shenhua Energy jumping 6.6 percent to HK$46.15, after the country's top coal producer said on Sunday it would raise up to 66.58 billion yuan ($8.9 billion) in what is expected to be the country's largest domestic share listing.
Zijin Mining Co Ltd ended unchanged after profit-taking pulled the stock down from its all-time high of HK$14.60, up nearly 15 percent as gold prices rallied to a 28-year high on Friday. Some brokers turned a bit cautious after the value of the broader market rose about one-third this year. "Investors should take half of their profits at these levels," said Alfred Chan, chief dealer at Cheer Pearl Investment.
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