Hong Kong shares rose 0.5 percent on Wednesday as investment guru Warren Buffett's vote of confidence in Wall Street banks spurred a rally in some financial counters, but Bank of East Asia (BEA) slid despite denying rumours questioning its financial stability.
Chinese refiners gained on market talk of a hike in retail fuel prices, with Sinopec Corp up 2.8 percent while PetroChina, Asia's largest oil & gas producer rallied 2.5 percent. Refiners are currently squeezed by the wide gap between international crude oil prices and regulated prices of refined products in China. The benchmark Hang Seng Index closed up 89.1 points at 18,961.99 after dropping nearly 4 percent on Tuesday. But the index closed well below its early high of 19,291.02.
Hong Kong's No 5 lender, Bank of East Asia, tumbled 6.9 percent to HK$25.15, its lowest close since February 2006, in a sharp sell-off despite reassurances of financial soundness from the lender and Hong Kong's de facto central bank.
In the first half hour of the post-lunch trading session, more than 21 million shares of Bank of East Asia changed hands, compared with just 8.2 million shares in the whole day on Tuesday, as long queues formed outside the lender's branches in the city. A total of 61.78 million shares in Bank of East Asia were traded on Wednesday, its highest volumes since November 2007 when BOC Hong Kong acquired a nearly 5 percent stake in the bank.
In the broader market, mainboard turnover fell to HK$59 billion ($7.6 billion) from HK$64.4 billion on Tuesday. Financial stocks leapt on news Warren Buffett's Berkshire Hathaway Inc will invest $5 billion in Goldman Sachs "Everybody is just following god, Warren Buffett has shown the way," said Francis Lun, general manager with Fulbright Securities.
In addition to Buffett's surprise invest it had bought 2 million shares in its top three state-owned banks in accordance with the government's market rescue plan. China Life the nation's top insurer surged 3.1 percent, paring Tuesday's 5.1 percent drop. Europe's largest bank HSBC edged up 0.3 percent while China's biggest lender ICBC rose 0.9 percent. The China Enterprises Index of top locally listed mainland Chinese firms gained 0.3 percent.
China Shenhua Energy, the world's most valuable coal company, fell 1.6 percent. J.P. Morgan downgraded the stock to neutral from overweight late Tuesday saying the demand cycle for the commodity may have peaked and contract coal prices are unlikely to trend higher.
Shares in Digital China Holdings Ltd, the country's largest information technology (IT) distributor, jumped 4.9 percent as the company told Reuters it plans to boost its fast-growing services business via acquisitions before listing it in three to five years. China Cosco, the nation's premier shipping conglomerate, fell 6.1 percent tracking a 3.4 percent slide on the global freight index on Tuesday.
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