Hong Kong shares rose on Friday, nudging up both indexes for the week, with growth-sensitive counters buoyed by positive US jobless claims ahead of a monthly payrolls report later in the day and more China economic figures over the weekend.
China also boosted market sentiment as the country's exports dramatically exceeded expectations in February, although imports were much weaker than forecast. A flurry of corporate earnings next week will test how the macro-economic recovery in China has improved profitability. The Hang Seng Index rose 1.4 percent to close at its highest since February 20 at 23,092 points. Friday's gains helped the benchmark rise 0.9 percent on the week and break above chart resistance seen at around 23,000.
The China Enterprises Index of the leading Chinese listings in Hong Kong climbed 1.5 percent on the day and 1.2 percent on the week. Hong Kong turnover on Friday improved from Thursday's near two-week low and was above average. Offshore China indexes outperformed onshore peers this week. The CSI300 of the top Shanghai and Shenzhen listings fell 2.3 percent this week after Friday's 0.5 percent slip. The Shanghai Composite Index was off 1.7 percent this week after shedding 0.2 percent on the day.
Shanghai volume was at its lowest in more than a week, sinking some 20 percent below its average in the last month ahead of February data on China inflation, urban investment, industrial output and retail sales due on Saturday and monthly money supply and loan growth figures expected from Sunday.
"We see economic recovery in China already, so it will be important to see how that is translated into the earnings recovery for Chinese companies," said Benjamin Chang, chief executive officer of LBN Advisors, a firm that manages more than $400 million in two China funds. For January and February combined, exports rose 23.6 percent, while imports increased 5 percent, which compared with expectations for rises of 17.6 percent and 10.0 percent respectively.
Shares of China Shenhua Energy jumped 3.9 percent in Hong Kong, leading other Chinese coal producers higher on signs that more flexible price contract agreements with power producers will improve margins. In a note dated March 7, Morgan Stanley analysts said there is a limited downside to current coal prices, expecting the demand-supply situation to tighten.
This would augur well for coal producers since sales volumes are index linked, implying the end of annual fixed price contracts. Weekly and monthly pricings are being discussed, which will enhance the margins for coal producers. Gains on Friday helped China Shenhua cut steep losses on the year. It is now down 13.3 percent in 2013, compared to the 1.9 percent gain on the Hang Seng Index and 0.4 percent rise on the China Enterprises Index. Chinese oil giant CNOOC Ltd climbed 2.3 percent on higher oil prices and after the $1 billion deepsea drilling rig in the South China Sea it owns returned to work after nearly two months of repairs.