New | HK stocks take cue from mainland Chinese markets
Hang Seng Index closes 0.92 per cent higher in catch-up as Beijing's aggressive military strategy sets off big rush for defence plays
After an extended weekend break on Monday, the Hang Seng Index rose on Tuesday to catch up with the sizzling mainland Chinese stock markets, boosted by expectations of increased defence spending following the release of a hawkish military white paper by Beijing.
The Hang Seng Index closed 0.92 per cent higher, while the H-share index rose 2.55 per cent.
The share price of market operator Hong Kong Exchanges and Clearing jumped 5.38 per cent to a record HK$309.40.
The Shanghai Composite Index rose 2.02 per cent to 4,910.9 points, yet another record high since the global financial crisis of 2008, following a 3.35 per cent rally on Monday.
The Shenzhen Composite Index also ended at a new high, leaping 3.38 per cent to 16,903.47 points, after rising 1.61 per cent on Monday.
"The [mainland Chinese] market seems to be accelerating rather than cooling," said Gerry Alfonso, a director of Shenwan Hongyuan Securities.
The Hong Kong market's turnover reached HK$203.64 billion, a high in recent weeks. The northbound turnover of the Shanghai-Hong Kong Stock Connect was 17.98 billion yuan (HK$22.5 billion), one of the highest on record, while southbound it was HK$9.07 billion.
The value of stocks traded in Shanghai and Shenzhen hit a record 2.16 trillion yuan, surpassing Monday's record of 2.03 trillion yuan.
Ben Kwong Man-bun, a director of KGI Asia, said Tuesday's rally was driven by Beijing's announcement of a more aggressive military strategy as well as a run of positive news in recent days such as the 600 billion yuan cross-border fund sales scheme.
Alfonso agreed. "The white paper released by the State Council covering military strategy gave defence stocks massive support, with most of them reaching their limit-up."
China Spacesat, a satellite maker, and Beijing BD Star Navigation, a maker of satellite navigation products, both hit their 10 per cent limit, while North Navigation Control Technology, which makes military products, surged 9.65 per cent.
The Hang Seng Index rose 2.21 per cent in the morning session but finished the day up 0.92 per cent. The reason for the slowdown in the afternoon was a fall in some major index stocks as well as profit taking, Kwong said.
HSBC Holdings fell 0.73 per cent, while CLP Holdings lost 1.09 per cent.
However, the Hang Seng Index still outshone other Asian markets. Japan and South Korea both rose 0.12 per cent, while Singapore fell 0.03 per cent and Taiwan rose 0.25 per cent.
As for the mainland Chinese markets, Shanghai lagged Shenzhen as banking stocks underperformed, Alfonso said.
Among the banking stocks in Shanghai, all but a handful corrected, he said.
"The banking sector has a big influence in the Shanghai market as some of the banks are massive," he said. "It is likely some investors decided to sell their bank holdings in anticipation of the industrial profits figure to be released [today]. If the figure is poor, the banking sector could be affected, as it is a proxy for the overall economy."
