Hong Kong stocks rose to a two-week closing high on Tuesday, with investors taking heart from a rally on Wall Street and a pledge by the Group of 20 to keep aid flowing to the world economy. But the index trimmed earlier strong gains in afternoon trade as investors took profit following a three-day rally. The benchmark Hang Seng Index rose 60.61 points to 22,268.16.
Although brokers said the rally was likely to continue on strengthening risk appetite, they said any upside on the index would be limited as valuations look stretched. "Valuations are not attractive at all," said Castor Pang, research director at Cinda International. "Investors will not increase their holdings on the Hong Kong stock market at this level."
"They are only looking for an excuse to push the market higher before they unload their positions," he said. The agreement by G20 finance ministers and central bankers to keep economic stimulus measures in place boosted hopes for prolonged low interest rates, spurring a rally in global stocks. "Liquidity remains abundant locally and that will limit the downside in the short term," said Ben Kwong, chief operating officer at KGI Asia.
Kwong said he expected Hong Kong's stock index to breach 23,000 within the next few days. Turnover was at HK$70.5 billion ($9.1 billion), up from Monday's HK$65.09 billion. The China Enterprise Index of top locally listed mainland Chinese stocks rose 0.37 percent to 13,367.19.
Sinopec Corp, Asia's top oil refiner, fell 1.5 percent to HK$6.72, even after China raised fuel prices, boosting the profit outlook for the country's refiners. The stock rose as much as 2.6 percent to a three-week high of HK$7 in the morning. PetroChina, China's No 2 refiner, gained 0.8 percent in Hong Kong to HK$10.12, retreating from a two-week high of HK$10.24 set in morning trade.
The US dollar briefly fell to a 15-month low overnight, bolstering stocks pegged to commodities such as gold. Sino Gold Mining rose 5.7 percent to HK$54.65. BYD Electronic, the battery making arm of BYD Co, fell 5.14 percent to HK$6.65 after Nokia said it would recall 14 million cellphone chargers made by the Chinese company.
Auto stocks surged after China said passenger cars sales in October surged 76 percent from a year earlier, extending the explosive growth in recent months as government incentive policies continued to lure customers. Qingling Motors jumped 32.02 percent to HK$2.35 and Brilliance China climbed 14.95 percent to HK$2.46.
China's key stock index edged up 0.1 percent, rising for an eighth session in a row to a three-month closing high with property shares taking the lead, ahead of economic data for October that is expected to be strong. The Shanghai Composite Index ended at 3,178.610 points. Losing Shanghai A shares outnumbered gainers by 489 to 384, while turnover edged up to 163 billion yuan ($23.88 billion) from Monday's 158 billion yuan.
Property shares led the rise, with Poly Real Estate Group up 2.86 percent at 27.01 yuan after posting a 143 percent surge in contract property sales in the first 10 months. Analysts said investors were encouraged by official comments about the economic recovery and stable monetary policy. Ma Delun, a vice-governor with the People's Bank of China, reaffirmed on Tuesday that China would continue its accommodative monetary policy stance.
"Investors remain cautious after recent gains, but stock valuations are relatively reasonable, backed by rising earnings. The index has a chance to rise higher," said Chen Jinren, analyst at Huatai Securities. The 14-day Relative Strength Index rose to 65, edging close to the overbought mark at 70. "Profit-taking pressure pulled the index off the highs today. Investors are waiting for tomorrow's economic data, which is likely to be strong," said Cao Xuefeng, senior analyst at Western Securities.
China Minsheng Banking Corp edging up 0.12 percent to 8.12 yuan after saying on Tuesday that its failed investment in US lender UCBH Holdings Inc would have a limited impact on its business. Health-related shares rose after the World Health Organisation said over the weekend that the H1N1 flu virus was on the rise in China. Henan Taloph Pharmaceutical surged by its 10 percent daily limit to 10.96 yuan, while Shenzhen Neptunus Bioengineering jumped 6.17 percent to 21.15 yuan.
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