Hong Kong shares rose 1.4 percent on Thursday, advancing for a third straight day but closing off highs as investors locked in gains on Chinese stocks after they took the nation's aggressive interest rate reductions as a sign of a sharper-than-expected slowdown.
"The unusually big interest rate cut which was announced ahead of market expectations seems to suggest that China's economic worries are more serious than previously thought," said Patrick Shum, strategist with Karl Thomson Securities. China's economic growth slowed to 9 percent in the third quarter, falling into single digits for the first time in at least three years.
"There is talk that China's GDP growth will fall below 8 percent in the fourth quarter." But mainland property counters racked up big gains, with China's higher-than-expected 1.08 percentage point interest rate cut - its fourth since mid-September and biggest in more than a decade - coming as a shot in the arm for the ailing sector.
China Overseas Land Investment surged 7.5 percent, Guangzhou R&F Properties soared 12.2 percent, while China Resources Land shot up 5.3 percent. The benchmark Hang Seng Index ended 182.61 points higher at 13,552.06. The index hit a two-week high of close to 14,000 points earlier, partly supported by a fourth day of gains on Wall Street and an overnight rally in commodity prices.
And some analysts expect the global markets to trend higher in coming weeks. "China's unexpected rate cut and confidence in Obama's new financial team may help the global markets extend their rally, especially if the US can find a solution for its automakers soon after Thanksgiving," said Steven Leung, director with UOB Kay Hian. Mainboard turnover rose to HK$50.2 billion ($6.4 billion) from HK$41.7 billion on Wednesday.
The China Enterprises Index of top locally listed mainland Chinese firms pared gains to 2.7 percent to close at 7,120.83 as bank stocks shed early sharp gains. Shares in China's top lender, ICBC, ended up 1.6 percent after China's central bank slashed the reserve requirement at large banks by 1 percentage point. But some analysts said the latest round of interest rate cuts may put further pressure on net interest margins of locally listed Chinese banks. Metal stocks, which began their sharp ascent on Wednesday on BHP Billiton's scuppered bid for Rio Tinto, extended gains on China's monetary easing.