Hong Kong shares clawed into the black, closing 0.6 percent higher in a late rally on Wednesday as investors short-covered previously sold-down stocks including China Mobile and Bank of East Asia. But gains were offset by losses in shares of heavyweight HSBC, which weighed down the main index on worries about the health of European banks.
The benchmark Hang Seng Index closed 70.60 points higher at 13,016.00, well off its low of 12,712.33. HSBC ended 1.4 percent to HK$56.70, after coming within striking distance of sliding below its decade-low earlier on Wednesday. Standard Chartered shed 4.7 percent at HK$81.90. Their Wall Street peers were slammed on Tuesday after ratings agency Moody's said they could be hit by the recession in Eastern Europe.
"Nothing has changed fundamentally in the last few days, but all that could change once we start seeing more companies come out with their earnings," said Mona Chung, fund manager with Daiwa Asset Management. Unlike blue chip indexes in the United States and Japan, the HSI is still perched well above its 2008 bear market low of 10,676.29, mainly because of an uninterrupted five-day rally which ended last week.
Mainboard turnover edged up to HK$42.8 billion from HK$41.7 billion on Tuesday. Tuesday's 3.8 percent slide on the main index prompted investors to cover short positions in China Mobile, which rose 1.3 percent on Wednesday and Hutchison Whampoa which jumped 4.6 percent.
Beaten-down shares in Bank of East Asia continued to recover, rising 3.9 percent on Wednesday despite announcing a bigger-than-expected loss for the second half of 2008. The China Enterprises Index of top mainland firms rose 0.3 percent at 7,212.54, defying a steep fall on the Shanghai bourse.
"After the recent rally in Shanghai, the premium gap between A-shares and H-shares is really high, so it's not a big surprise to see the Hong Kong-listed stocks move up today," said Patrick Yiu, associate director with CASH Asset Management. The premium gap between yuan-denominated, mainland-listed A-shares and their Hong Kong-listed counterparts had risen to more than 60 percent from about 20 percent at the beginning of the year.
The Shanghai Composite Index added to Tuesday's 2.9 percent drop, to fall another 4.7 percent on Wednesday on concerns that a surge in January bank lending was not as positive for the economy as it originally seemed. Lam is offering shareholders HK$0.40 per share, a 92.3 percent premium over its last trading price of HK$0.208 a share on February 10 for all outstanding shares he does not already own, worth about HK$119.6 million.
Bulk shipper China Shipping Development rose 10.6 percent to HK$7.18 after the global freight index recovered from a recent pullback. The Baltic Dry Index gained 2.7 percent on Tuesday after snapping a long winning streak last week. It gained for 17 days before dropping for three sessions from last Thursday. China Cosco, the nation's largest shipping conglomerate, climbed 7.3 percent to HK$5.03.