Chinese Stocks in Hong Kong Surge Before Mainland Markets Open

Chinese stocks in Hong Kong jumped to an almost seven-week high as investors wait for mainland markets to open tomorrow after a week-long holiday. Energy companies surged on higher oil prices while automakers continued their rally.

The Hang Seng China Enterprises Index added 4.7 percent to 10,394.79, its highest close since Aug. 20. Cnooc Ltd. and PetroChina Co. posted some of the biggest gains on the benchmark Hang Seng Index after crude extended its advance from a one-month high. Great Wall Motor Co. soared 15 percent after trailing increases by other automakers on Tuesday.

The Hang Seng Index rose 3.1 percent to 22,515.76, with volume 31 percent higher than its 30-day average. Mainland markets have been shut since Oct. 1 for National Day holidays. The Hang Seng China Enterprises Index traded at 7.7 times estimated earnings, less than half the global average. The gauge tumbled as much as 39 percent from this year’s peak as multiple cuts to interest rates and the reserve requirement ratio failed to revive the nation’s economy.

“H shares are being driven by oil stocks as oil prices surged last night,” said Daniel So, a strategist at CMB International Securities Ltd. “Over the next week, H shares will stay strong ahead of the fifth plenary session of the Communist Party of China. People may be optimistic that supportive policies will come out.”

The Communist Party Plenum scheduled for this month is set to chart the path for China’s development.

Energy Shares

Almost half the top 10 gains on the Hang Seng Index were oil companies. Cnooc, China’s biggest offshore crude and gas explorer, surged 14 percent, while PetroChina and Kunlun Energy Co. jumped at least 8.5 percent. Oil futures rose as much as 2.4 percent in New York as U.S. industry data showed crude stockpiles fell in the world’s biggest consumer. The Energy Information Administration increased its forecast for 2015 global oil demand, according to a monthly report Tuesday.

Great Wall jumped 15 percent to HK$10.74, while Brilliance China Automotive Holdings Ltd. gained 9.4 percent to HK$10.24. Carmakers surged over the past week after a tax cut on passenger-vehicle purchases. Brokerages also rallied, with Citic Securities Ltd. soaring 11 percent to HK$16.56 and Guotai Junan International Holdings Ltd. rising 9.8 percent to HK$2.68.

IMF Forecast

The International Monetary Fund cut its global growth outlook for this year to 3.1 percent from a July forecast of 3.3 percent amid a slowdown in emerging markets driven by weak commodity prices. The fund left its outlook for China’s growth this year at 6.8 percent and 6.3 percent for next year. Still, the IMF said the “cross-border repercussions”of slowing Chinese growth “appear greater than previously envisaged.”

China’s foreign-exchange reserves fell by a record last quarter as the central bank sold dollars to support the yuan after a surprise devaluation spurred bearish bets on the currency. The stockpile plunged by $180 billion in the three months through September, the most in data going back to 1995, to $3.51 trillion, according to Bloomberg calculations based on data released by the People’s Bank of China on Wednesday.

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