Hong Kong equities pushed further into record territory on Wednesday as buyers rushed in to join a rally sustained by more news of Shanghai listings by top Chinese companies, but a weak mainland market shaved the gains in late trade.
Oil producer PetroChina Co Ltd shot up to new highs after saying it was planning its first share sale in the mainland, following earlier reports that cellular operator China Mobile may seek the same.
PetroChina's announcement helped Hong Kong-listed China plays, or H shares, breeze past the 12,000 mark for the first time as investors sought to narrow the price gap between the H shares and the yuan-denominated A shares traded in the mainland.
"Punters and institutional players are buying the H shares, hoping to narrow the gap as more QDII money comes into Hong Kong - I think that has been the thrust of it," said Howard Gorges, vice chairman at South China Brokerage, referring to the qualified domestic institutional investor scheme that allows mainland investors to plough money into overseas securities.
Hong Kong blue chips ended at their third straight record close while Hong Kong-listed China plays finished at their fourth consecutive closing high. The market clocked fresh records steadily through the morning on massive turnover, but by the afternoon, declining mainland-listed stocks gave investors a reason to book the hefty gains amassed over a four-session winning streak.
Mainboard turnover was an unprecedented HK$121.4 billion (US $15.6 billion), topping Monday's record. The market was closed on Tuesday for a public holiday. "We are seeing liquidity we haven't seen before. Big cauo. But Cheng said the market was ripe for a pullback, being above the threshold of overbought, technical indicators show. The Hang Seng's 14-day relative strength index (RSI) stood at 81.56. The market views an RSI of 70 or above as overbought.
The benchmark Hang Seng Index closed up 101.78 points at 21,684.67 after hitting an all-time intraday high at 21,897.58. The China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, set a new peak at 12,138.00 before easing to end the day up 0.3 percent at 11,905.48.
PetroChina, the largest boost to the H shares which set a new high at HK$12.08, surged 5.2 percent to HK$11.74 after saying it was planning a Shanghai listing that could raise up to US $5.7 billion to fund overseas acquisitions.
Hong Kong Exchanges and Clearing, buoyed by huge turnover, ramped up 3.8 percent to HK$102.80, or 10 cents off an all-time high set in earlier trade. Investors bought underplayed H shares such as nonlife insurer PICC Property and Casualty Ltd, which raced up 5.8 percent to HK$5.87.
Mainland power producers also rallied, led by Datang International Power Generation Co Ltd, which rocketed 13.6 percent to HK$12.74 in heavy trade. Huadian Power Int'l Corp Ltd posted a 5.4 percent gain to HK$4.13. China Mobile ended flat but earlier surged to an intraday record of HK$82.5 after saying it added a record 5.46 million new subscribers in May.