Hong Kong shares hit a two-week closing high on Wednesday, lifted by buoyant oil and mining stocks as a rally on Wall Street offset Beijing's decision to raise bank reserve requirements for the second time this year. Mainland bank and property stocks rose after the market reopened following a two-day Lunar New Year holiday, with investors shrugging off Friday's move, which was aimed at soaking up excess liquidity in its banking system.
"It seems that the market has already factored in the reserve ratio requirement increase," said Castor Pang, research director at Cinda International. "The Hang Seng Index and the A share market have dropped too much recently. The holiday also helped." ICBC rose 2.15 percent, China Construction Bank gained 0.67 percent, and Bank of China added 1.84 percent. China Overseas Land advanced 1.33 percent.
The benchmark Hang Seng Index ended up 1.31 percent or 265.32 points at 20,534.01, as investors locked in profits after the index rose as much as 2.05 percent in morning trade. The index ended the week 3.07 percent up on Friday, its biggest weekly percentage gain in 10 weeks.
US stocks enjoyed their biggest daily percentage gain in three months on Tuesday after strong revenue from drugmaker Merck and regional manufacturing data made investors more confident in the econonmic outlook. "It's like a perfect storm," said Jackson Wong, investment manager at Tanrich Securities. "People tend to sell on good news. We just don't have enough to sustain it."
"The Greek situation is critical. We will wait for the Chinese market to reopen again," he said. The China Enterprises Index of top locally listed mainland Chinese stocks closed up 1.49 percent at 11,708.34. Tanrich's Wong said the rally was sustainable, even though trading will be thin during the Lunar New Year holidays.
Market turnover fell to HK$39.12 billion ($5 billion), the lowest so far this year, from Friday's HK$45.67 billion. "For this week, the rebound will continue," Pang said, adding that the index could test 21,000. "Commodity stocks will be the major driver to help the Hang Seng index. I will recommend investors accumulate them."
Energy stocks featured prominently among the top-weighted gainers, with PetroChina rising 1.97 percent and CNOOC up 1.31 percent after oil rose towards $78 a barrel on Wednesday, supported by the weaker dollar and a rally in stocks, as optimism over the global economy stoked hopes for higher fuel demand. Mining stocks also gained as metal prices rose after the dollar fell against the euro. Zijin Mining added 2.74 percent and Jiangxi Copper advanced 1.88 percent.
Aluminium Corp of China (Chalco) rose 2.68 percent. Chinese banking stocks have been hit since the start of the year on a slew of bad news, with fears centering around the chance of more monetary tightening in China and plans by mainland lenders to shore up their capital bases. Bank of Communications (BoCom) rose 1.39 percent, despite a newspaper report that it is asking investment banks to submit plans to handle a 25 billion yuan ($3.7 billion) fund raising to bolster its stretched balance sheet.
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