China Shares in Hong Kong Rise Most Since May Amid Global Rally

  • Signs of economic recovery, U.S. jobs data support market
  • Spread between dual-listed stocks narrowest since early June

Chinese stocks traded in Hong Kong rose the most in seven weeks, joining a global rally as data on U.S. jobs signaled the world’s biggest economy is on a stronger footing.

The Hang Seng China Enterprises Index was up 2 percent at the close of trading, after sliding last week. The S&P 500 Index jumped 1.5 percent on Friday after a report showed a 287,000-worker increase in nonfarm payrolls in June, the most in eight months. On China’s mainland, the Shanghai Composite Index pared gains to close 0.2 percent higher Monday.

China’s factory-gate deflation eased for the sixth straight month in June, adding to evidence that falling prices have turned a corner after more than four years of declines. Stocks received a boost also as the country’s pension funds, which have about 2 trillion yuan ($300 billion) to invest, prepared to start deploying cash in equities in the second half of the year.

“Market sentiment is improving in Hong Kong and China as investors find U.S. jobs data encouraging and expect further credit easing in China to counter the Brexit impact,” said Linus Yip, a Hong Kong-based strategist at First Shanghai Securities Ltd.

The Hang Seng China AH Premium index dropped 1.5 percent to the lowest level since early June, as A shares became less expensive relative to H shares. Consumer and energy companies led gains in Hong Kong, with Belle International Holdings Ltd., a retailer of women’s shoes, jumping 5.1 percent. China Petroleum & Chemical Corp. climbed 3.2 percent, while China Shenhua Energy Co. rose 2.3 percent.

The H share index closed at 8,703, while the Hong Kong benchmark climbed 1.5 percent to 20,880.50. The Shanghai Composite rose as much as 1.2 percent before closing at 2,994.92, just short of the 3,000 level it breached last week for the first time since April.

The impact of Britain’s vote to leave the European Union is already showing on global financial markets and measures are needed to ensure stability in the international economy, Chinese Premier Li Keqiang said at the World Economic Forum in Tianjin on June 27.

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