China's benchmark stock index closed up 1.7 percent for the sixth straight day on Tuesday, led by gold miners' shares, amid continued signs of government policy support for equity trading. Hong Kong stocks followed suit and closed up 2.14 percent for the fourth straight day, with China banks leading rises on hopes of support from Beijing and that the Chinese government was not likely to take drastic steps to stifle the stock market's rally.
The benchmark Hang Seng Index finished 440.5 points higher at 21,069.81, its highest close since mid-August. The China Enterprises Index, which represents top locally listed mainland Chinese stocks, was up 2.48 percent at 12,275.66. "More buying interest was noted in the local market as China's market continued to rise," said Patrick Yiu, a director at CASH Asset Management. "Demand for laggards gave Chinese banks firm support as their valuations are below the index average."
ICBC, the country's largest lender, gained 1.9 percent; China Construction Bank, China's No 2 lender, jumped 2.4 percent, while Bank of China rose 2.2 percent. China Life also climbed 2.3 percent. Brokers said the local market remained volatile as speculative interest dominated trading.
Zhongjin Gold climbed 5.7 percent to 59.99 yuan after US gold futures hit $1,000 an ounce for the first time since February as the dollar's weakness, concerns about the sustainability of the global economic recovery and worries about future inflation underpinned sentiment. Zhaojin Mining surged more than 13 percent to a 4-month high at HK$14.40 before the stock ended at HK$14.28. Mengniu Dairy rose almost 6 percent after it posted a 13.6 percent rise in January-June profit and its turnover showed a gradual recovery to the level before a milk incident last year.
The Shanghai Composite Index closed at 2,930.475 points, having gained more than 10 percent since it hit this year's intraday low on September 1, with policy support offsetting profit-taking pressure and heavy supplies of new shares, and as the stock regulator was pushing more securities mutual funds into the market.
Gaining Shanghai A shares overwhelmed losers by 758 to 105, while turnover rose slightly to a relatively decent 148 billion yuan ($22 billion) from 146 billion on Monday. The official China Securities Journal reported that nine securities mutual funds, tracking China's stock indices, are being launched in September, pumping 50 billion yuan ($7.3 billion) into the market.
In line with other official comments in recent weeks, which propped up the market, central bank Vice Governor Su Ning said on Tuesday that China had not indicated it was planning to shift monetary policy - one of the key concerns that caused the market to plunge 22 percent in August.
"We never said we will adjust monetary policy," Su told reporters during a visit to Taiwan when asked if there was room to move interest rates. Regulators appear to have taken steps to bolster the market since early this month ahead of the October 1 National Day which marks the 60th anniversary of the founding of the People's Republic of China, seen as one of the country's major political events when Beijing typically tries to keep the market stable.
Stocks in sectors such as tourism, fireworks, military product makers and retailers, whose performance is believed linked to the country's founding anniversary, outperformed. Panda Fireworks Group, Beijing Jingxi Tourism Development, China North Optical-Electrical Technology all jumped their 10 percent daily limits, while Beijing Xidan Department Store advanced 4.56 percent to 9.41 yuan. Chen Shaodan, senior analyst at Stockfly Securities in Beijing said positive policy and upbeat economic data could lift sentiment further in the near term.
Auto shares were also strong on Tuesday, with SAIC Motor climbing 5.61 percent to 20.15 yuan and Changan Auto rising 3.67 percent to 11.03 yuan. The stocks were buoyed by a Xinhua news agency report late on Monday that China's vehicle sales exceeded 1 million units in August for the sixth straight month, helped by Beijing's policy initiatives.
On the negative news front, Metallurgical Corp of China (MCC), which is launching a $5.3 billion dual initial public offering (IPOs) in Shanghai and Hong Kong, is taking subscriptions in Shanghai on Tuesday and Wednesday, draining funds from existing shares.
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