Shanghai Stocks Halt Two-Day Losing Streak as H Shares Advance

  • Technology companies rally in Shanghai amid planned upgrades
  • Foreign investors halt sales of A shares through stocks link

Chinese stocks climbed in Hong Kong and Shanghai as Apple Inc. suppliers rallied after China said it would help manufacturers upgrade their technology and minutes from a Federal Reserve meeting signaled that the pace of U.S. interest-rate increases will be gradual.

The Shanghai Composite Index and Hong Kong’s Hang Seng China Enterprises Index both rose 1.4 percent at the close. GoerTek Inc., a supplier to the iPhone maker, surged 10 percent. Energy and financial companies were among the best performers in Hong Kong, with China Petroleum & Chemical Corp. and China Construction Bank Corp. gaining at least 2.2 percent. The H-shares gauge rose the most in a week and climbed above the 50-day moving average.

Fed minutes spurred a rally for global equities after officials said “it may well become appropriate” to raise rates in December and largely agreeing that the pace of tightening would be gradual. Traders are pricing in a 66 percent probability of a move -- odds that shot up after a stronger-than-expected October jobs report on Nov. 6. Strengthening U.S. growth bolsters the outlook for Chinese exports, which have been faltering amid a slowdown in the second-biggest economy.

“It’s a temporary break after the release of Fed minutes,” said William Wong, head of sales trading at Shenwan Hongyuan Group Co. in Hong Kong. “The banking sector is leading the rally for now. But trading is going to be slow in the next month as we see more and more clients exiting the stock market.”

Foreign investors have recently been offloading mainland stocks through the Hong Kong-Shanghai stocks link, which recorded 21 straight sessions of net sales until Wednesday. The stocks connect celebrated its one-year anniversary this week.

Technology Support

China’s cabinet said the government will support targeted industries to upgrade their technology, the official Xinhua News Agency reported Wednesday. The government will guide private investment into industries such as light manufacturing, textiles, steel and construction materials, Xinhua reported, citing a statement released after a State Council meeting chaired by Premier Li Keqiang.

A gauge of technology stocks in the CSI 300 rose 4.2 percent, extending gains to 52 percent since the start of the year for the best performance among 10 industry groups. Han’s Laser Technology Co., which also supplies to Apple, jumped 3.4 percent. Leshi Internet Information & Technology Corp., the biggest mainland-listed Internet video provider, advanced 6.1 percent.

Looming IPOs

China will guide private investment into industries such as light manufacturing, textiles, steel and construction materials, Xinhua reported Wednesday, citing a statement released after a meeting chaired by Premier Li Keqiang.

In Hong Kong, coal producer China Shenhua Energy Co. advanced 3.2 percent, while Bank of China Ltd. added 1.7 percent.

The CSI 300 Index advanced 1.6 percent, while the Hang Seng Index increased 1.4 percent in Hong Kong. Turnover in Hong Kong and Shanghai slumped, with trading volumes at least 19 percent below the 30-day average.

The People’s Bank of China doubled the amount of money supplied to the financial system via a short-term lending tool, helping contain borrowing costs as a freeze on new share sales draws to an end. The China Securities Regulatory Commission said this month that 28 companies were in the process of holding initial public offerings when such offerings were suspended in July and these will be allowed to proceed by year-end.

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