Hong Kong stocks jumped on Tuesday, with local property shares leading the way ahead of a widely expected US interest rate cut, while a capital injection into struggling global financial firms fuelled buying in the likes of HSBC.
Shrugging off higher-than-expected inflation data from China, Chinese metals and shipping firms, such as Jiangxi Copper and CSCL, helped to lift the index of Chinese companies listed in Hong Kong. However, anticipation of further monetary tightening measures in China could put a cap on mainland property and banking stocks, brokers said.
The benchmark Hang Seng Index finished up 2.55 percent at 29,226.84, a hair below the day's high of 29,235.21. It ended two straight days of losses and has gained 46 percent this year. Rate-sensitive local property issues Sino Land jumped 7.3 percent, Swire Pacific rose 7.2 percent and Henderson Land gained 7.0 percent ahead of the US Federal Reserve's interest rate meeting later on Tuesday.
"If the US rate cut is higher than an expected 25 basis points tonight, the market should rise further," said Joseph Lau, a director at Tai Fook Asset Management. The China Enterprises Index of H shares rose 1.81 percent to 17,497.77, for a 69 percent gain so far this year.
Mainboard turnover eased to HK$89.96 billion (US $11.54 billion) from HK$113.09 billion on Monday. "Blue chip property stocks rose but turnover is relatively thin and the market is still in a see-sawing mode," said Francis Kwok a director of Peace Town Securities Ltd. The Hang Seng Index was likely to move below 30,000 points, with the focus on blue chip stocks in the short-term, as people await clues on the longer-term outlook, he added.
China's annual consumer price inflation surged to an 11-year high of 6.9 percent in November, higher than economists' expectation of a 6.4 percent rise. But since the figure had already been rumoured in the market on Monday, it had little impact. This just proved Beijing will further tighten its monetary policy and that has been reflected in the market, said Steven Leung, sales director of UOB Kay Hian Holdings.
"China wants to slow the economy but it doesn't want to risk a recession, or a sharp slowdown," said Howard Gorges, director of South China Brokerage. Jiangxi Copper topped the H-share index stocks, rising 4.8 percent, while CSCL also rose 4.7 percent.
HSBC, which had underperformed the market lately, climbed 2.17 percent as investors welcomed cash injections into Swiss Bank UBS and MBIA Inc China Overseas fell 0.92 percent Biotech firm Global Green Tech Group plunged nearly 21 percent after it postponed a US $309 million IPO of its cosmetics and skin care unit, Bio Beauty Group Ltd, due to the recent market situation.
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