Hong Kong blue chips shook off morning losses to gain 0.6 percent in their third-straight record on Friday, as investors chased Hong Kong Exchanges and Clearing Ltd (HKEx) on the back of ample fund flows chasing the China growth story.
Mainboard turnover was the second-highest ever, with Hong Kong-listed shares in mainland companies rising nearly 1 percent as investors piled into resource shares, led by PetroChina Co Ltd's record high and surging gold plays.
Chinese coking coal miner Hidili Industry International Development Ltd beat expectations in its debut, settling at HK$12.12, or 77 percent higher than its IPO price. "It's all still very buoyant and very Chinese-driven - all the stories seem to be about fund flows," said Miles Remington, head of sales and trading at BNP Paribas.
"With Japan in the doldrums, I think you're going to see funds allocating more assets into Hong Kong," said Andrew Sullivan, head of sales trading at Daiwa Securities. The benchmark Hang Seng Index reversed course in the afternoon to close up 142.65 points to end at a fresh record close of 25,843.78, or up 3.8 percent for the week.
The China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, gained 141.43 points to 15,693.66, a fresh closing high. The index rang up a 6.7 percent gain for the week.
Mainboard turnover was a massive HK$132.3 billion (US $17 billion), second only to Wednesday's HK$138.7 billion. Investors brushed off Friday's Financial Times report quoting the chairman of China's banking regulatory body as saying there would be a quota on investments by citizens in Hong Kong-listed securities. Investors had widely expected limits to be placed on the programme after its launch was delayed, as Beijing was likely concerned that a fund outflow could sink its domestic markets.
Regardless, the spectre of a quota had little impact on sentiment, as rising fund flows from Chinese institutional money helped buoy the market. PetroChina, the day's most active stock and biggest boost to the H shares, closed up 4.7 percent at HK$12.96 after China's securities regulator said it would consider on Monday the oil producer's proposal for a domestic listing.
Sinopec Corp climbed 2.2 percent to HK$8.92, as speculation of an asset injection by its parent stayed alive. HKEx, which shot up out of nowhere in the afternoon, led the blue chips, rallying 12 percent to HK$219.2. The deal between Nasdaq and Borse Dubai to buy stakes in one another in the interest of creating a group of exchanges with unprecedented reach also put the spotlight on the city's bourse operator.
Among gold miners, Lingbao Gold bolted 15.1 percent to HK$7.25 and Zijin Mining Co Ltd surged 10.8 percent to HK$12.7. Australia's Sino Gold Mining Ltd raced 15.7 up percent to HK$49.75. Mainland airlines set fresh records amid further speculation of an industry-wide consolidation, sweeping up Cathay Pacific Airways, which holds a stake in Air China.
Cathay Pacific shares were up by as much as 12.4 percent before they were suspended in the afternoon. Air China finished up 1.5 percent at HK$11.84. China Southern Air shot up 7.6 percent to HK$13.90. China Eastern Airlines vaulted 12.4 percent to HK$9.72.