Hong Kong and China stocks were higher on Monday as abundant liquidity and expectations of yuan appreciation on the visit of US President Barack Obama to the mainland, fuelled buying for yuan-related assets. Hong Kong shares rose 1.73 percent for a second straight session of gains with banks leading the rise. The benchmark Hang Seng Index closed up 390.35 points at 22,943.98, its highest close since July 24, 2008.
HSBC Holdings climbed to as high as to HK$97.55, a 13-month high, before closing at HK$97.10, up 2.64 percent. HSBC said it would sell its European headquarters in London for 772.5 million pounds ($1.3 billion), giving a profit of about 350 million pounds on the sale and leaseback deal.
ICBC, China's largest lender, rose to a 25-month high of HK$6.98 before ending at HK$6.96, up 2.35 percent. China Construction Bank gained 3.65 percent to HK$7.39. "Yuan appreciation fuelled demand for yuan assets while a record high for gold fuelled buying of resources issues," said Francis Lun, general manager from Fulbright Securities.
"There is no doubt that it (the benchmark index) will breach the 23,000 level," Lun said, adding that the market could gain further if positive sentiment remained. Gold rose to record high on Monday of $1,132.40 per ounce as the US dollar weakened, sending gold miner Zijin Mining up 6.01 percent and copper producer Jiangxi Copper up 11.75 percent. Food packaging company CPMC, which raised US $139 million in an IPO, rose to HK$7.05 during its trading debut, up nearly 31 percent from its issue price of HK$5.39. It ended the session at HK$6.11.
The China Enterprises Index of top locally listed mainland Chinese stocks rose 2.15 percent to 13,751.65. Turnover rose to HK$76.36 billion (US $9.85 billion), from Friday's HK$70 billion. Hong Kong's central bank, the Hong Kong Monetary Authority, on Monday injected HK$3.1 billion (US $400 million) into the money market to keep the local currency within its fixed trading band.
Instant noodle and beverage maker Tingyi rose to an all-time high of HK$18.30 before paring gains to HK$18.26, up 2.7 percent. It posted a 60 percent rise in third-quarter earnings this morning to US $147.4 million. Cheung Kong Infrastructure (CKI) fell 2.84 percent. It said it was interested in bidding for Britain's biggest electricity distribution network, which was being sold by French utility EDF.
China's key stock index jumped 2.74 percent on Monday to a three-month closing high in heavy turnover, as US President Barack Obama's visit boosted expectations of yuan appreciation that have attracted overseas capital into China's markets. Renewable energy and airline shares were also active after Obama arrived in China for talks expected to include the yuan's value and climate change. The Shanghai Composite Index ended at 3,275.048, points, posting its biggest daily percentage rise since October 9 after gaining 0.7 percent last week.
Turnover climbed to a three-month high of 226 billion yuan ($33.11 billion) from Friday's 144 billion yuan, while gaining Shanghai A shares overwhelmed losers by 804 to 69 while "Expectations for hot money to keep flowing into China, amid pressure for yuan appreciation, encouraged buying and most market players are confident the index will surpass the year's high (of 3,478 hit in August)," said Zhang Qi, senior analyst at Haitong Securities in Shanghai.
Obama, who arrived in Shanghai late on Sunday night and flew on to Beijing on Monday afternoon in his first trip to China as president, has said he will raise the issues of the yuan's exchange rate, which critics charge undervalues the currency and gives Chinese exporters an edge in global trade, during his talks in Beijing.
But Shanghai's index of US dollar-denominated B shares ended down 0.38 percent at 250.241 points, hit by profit-taking after surging more than 9 percent on Friday and extending those gains early on Monday. Traders cited speculation about yuan appreciation, as well as a possible merger with a planned international board. J.P. Morgan chairman of China equities Jing Ulrich said on Monday that the first red-chip and foreign companies could list on the Shanghai stock exchange next year.
Coal shares led the day's gains as heavy snow disrupted coal transport and could boost prices. China Shenhua Energy gained 5.89 percent to 37.59 yuan, while Yanzhou Coal jumped 6.57 percent to 21.40 yuan. Unseasonably early and heavy snow in northern China had caused at least 38 deaths, the official Xinhua news agency reported. Renewable energy shares were active, with China's Tongwei, a solar energy company, up by its 10 percent daily limit at 10.35 yuan.
Airline shares surged, with Air China up 6.79 percent at 8.96 yuan, after most airlines doubled their fuel surcharges over the weekend on rising oil prices. The sector, with a high proportion of its costs denominated in foreign currencies, would also stand to benefit from yuan appreciation. Metal shares were firmer, with Jiangxi Copper up 6.58 percent at 42.94 yuan as copper futures prices rose.