The benchmark index for Chinese stocks in Hong Kong capped its biggest weekly gain since December 2011 as insurers climbed, widening a premium over Shanghai shares.
Ping An Insurance (Group) Co. rallied to its highest level since August 2011 in Hong Kong, while China Pacific Insurance (Group) Co. added 2.9 percent. Fosun International Ltd. fell 4.3 percent in the city, paring a drop of 7.1 percent, after the company rejected as untrue speculation that its parent’s Chairman Guo Guangchang was detained.
The Hang Seng China Enterprises Index advanced 1 percent to 11,448.74 at the close, taking this week’s gain to 7 percent. The Shanghai Composite slipped 0.4 percent to 2,196.38, trimming a weekly advance to 2.8 percent. Mainland shares are valued at a 6 percent discount, the most in three years, according to the Hang Seng China AH Premium Index.
“According to the Chinese calendar, 2014 is the year of the horse and that horse is going to go galloping at a high speed, and so we’re prepared by being fully invested,” Mark Mobius, who oversees about $53 billion as the chairman of Templeton Emerging Markets Group, said in Bucharest.
Chinese shares rallied this week after the government announced the largest package of economic reforms since the 1990s. Goldman Sachs Group Inc. raised its recommendation on the nation’s stocks to overweight, citing improving reform momentum, while Credit Suisse Group AG said Chinese equities are among its three top recommendations.
The reforms are getting a bigger vote of confidence from foreign investors than from the nation’s own citizens. The H-shares gauge has jumped more than twice as much as the Shanghai gauge since policy makers led by President Xi Jinping pledged to ease the one-child policy and liberalize interest rates.
Ping An Insurance rose 3 percent to HK$73.15. China Pacific Insurance added 2.9 percent to HK$31.50. Chinese insurers will outperform in 2014, HSBC Holdings Plc said.
Yanzhou Coal rose 3.2 percent to HK$8.63, leading a rally for energy companies. China Shenhua Energy Co., the biggest producer of the fuel, advanced 1.9 percent to HK$26.65 in a seventh day of gains. The company’s steam coal price increased for a ninth week, the China Securities Journal reported.
Fosun International fell to HK$7.13. The rumors that Guo had been detained are “unfounded,” Fosun International said in an e-mailed statement. The company will take all necessary steps to get to the bottom of the situation, according to the statement, which cited Guo.
Shanghai Fosun Pharmaceutical Group Co., a unit of Fosun International, slid 4.2 percent to 17.84 yuan after sinking as much as 10 percent.
Tianjin Marine Shipping Co. dropped 7.6 percent to 7.39 yuan, snapping a five-day, 35 percent rally. Shares of companies in Tianjin, a port city southeast of Beijing, had advanced on speculation a planned free-trade zone will lure business and boost profit. Tianjin Quanye Bazaar (Group) Co., a department store operator, slid 6.7 percent to 5.56 yuan, paring this year’s rally to 34 percent.
The H-shares gauge has risen 0.1 percent this year and trades for 7.8 times projected earnings for the next 12 months, compared with a multiple of 8.7 for the Shanghai Composite. The Shanghai index has slipped 3.2 percent in 2013, while the MSCI All-Country World Index has advanced 18 percent.
Chinese stocks in Hong Kong are “playing catch up with other global markets in a classic year-end type rally,” said Sandy Mehta, chief executive officer of Value Investment Principals Ltd. in Hong Kong. “There is still room to rally given valuations. Chinese A shares will likely follow, but many investors are skeptical economic growth has truly bottomed out. Further positive data points and proactive moves from the leadership should lead to better performance.”