Hong Kong shares rallied 3.1 percent to close at a 7-1/2 months high, in its third straight day of gains on Tuesday as signs of an early turnaround in the global economy lured investors in droves. Shares in HSBC shot up 6.3 percent to finish at four-month closing high of HK$68.35.
Partly helped by news that the Britain-based lender and Hong Kong's Bank of East Asia are set to become the first foreign banks to issue yuan bonds in Hong Kong. Bank of East Asia was up 5.6 percent at HK$24.55, while another London-based lender Standard Chartered put on 7.4 percent.
The benchmark Hang Seng Index ended up 521.12 points at 17,544.03, its highest closing level since October 2008. Turnover jumped to HK$83.7 billion from Monday's HK$66.4 billion. Surging volumes sent shares in bourse operator Hong Kong Exchanges & Clearing up 3.3 percent.
"With macro data finally stabilising, liquidity flows into risk assets have increased steadily in the past few weeks, giving equity markets a boost", said Andrew Orchard, analyst with RBS, in a note on Tuesday. The China Enterprises Index of top mainland companies was up 2.9 percent at 10,072.51 as the Shanghai Composite Index scaled a 9-1/2 month high.
The premium gap between yuan-denominated A shares listed on the mainland bourses and their Hong Kong-listed counterparts, H shares, dropped to 28.3 percent with top bank stocks including ICBC and China Construction Bank commanding nearly the same price on both exchanges. Energy stocks soared after crude prices rose above $60 per barrel as violence in top African crude exporter Nigeria and a fire at a key US East Coast refinery revived supply concerns.
Asia's largest oil and gas producer PetroChina advanced 5 percent, while offshore oil specialist CNOOC added 5.4 percent. Aluminum Corp of China, better known as Chalco, jumped 7.6 percent, while Angang Steel rose 5 percent. Shipping stocks extended their rally after the Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, hit a fresh 2009 high on Monday powered by Chinese demand for iron ore, coal and grains.
China Cosco, the country's largest shipping conglomerate, advanced 9.1 percent, while another dry bulk shipper China Shipping Development jumped 6.9 percent. Bucking the broad trend, China Resources Land Ltd dropped 2.8 percent to HK$14.84 after the property developer tapped the market for HK$4.3 billion (US $551 million), through a share sale to a major shareholder, to raise capital for future acquisitions for its land bank and for working capital. The company placed its shares at HK$14.34 each, a 6.03 percent discount to Monday's closing price.
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