HONG KONG, Aug 13: Hong Kong shares climbed to their highest in more than 2 months on Tuesday, as investors were hopeful that recent signs of stablility in the Chinese economy will translate into improved earnings outlooks for its companies.
Gains came in relatively robust turnover as the Chinese cyclical sectors extended recent strong gains with investors repositioning after a set of solid July economic data last week eased fears of a deepening slowdown in the world’s second-biggest economy.
At midday, the Hang Seng Index was up 0.7 percent at 22,432.8 points, the highest since June 3. The China Enterprises Index of the top Chinese listings in Hong Kong climbed 1.7 percent.
The Shanghai Composite Index was flat, while the CSI300 of the leading Shanghai and Shenzhen A-share listings slipped 0.1 percent from a two-month high.
‘Investors are mainly concerned with the sustainability of the good China macro numbers we saw last week,’ said Francis Cheung, CLSA’s Hong Kong-China strategist. He said investors should add cyclicals to their portfolio for the third quarter.
‘Forward guidance issued by companies will give investors a more concrete sense of that and how that is filtering down to earnings,’ Cheung added, but he doesn’t expect the results season will spur a significant reversal of outflows from China equities.
The Chinese property sector, which has already seen some robust earnings, was a standout outperformer in Hong Kong. Agile Property jumped 4.5 percent after posting robust July contracted sales figures.
Longfor Properties surged 7.2 percent, while Shimao Property rose 5.2 percent and China Resources Land and Country Garden each jumped nearly 4 percent.
Chinese cyclicals, battered in the last few months when sentiment on China was at its most bearish, recovered more ground with shippers, steel, cement and coal counters once again stonger.
(AGENCIES)
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