China H Shares Have Best Weekly Rally in a Month on Energy Gain

  • Energy producers advance as OPEC move boosts oil above $50
  • Profit taking likely ahead of U.S. jobs report, holiday: Yip

Chinese stocks in Hong Kong posted its best weekly rally in a month as higher oil prices turbocharged energy producers.

The Hang Seng China Enterprises Index has rallied 3.6 percent this week and was down 0.2 percent on the day. China Oilfield Services Ltd. surged 15 percent while PetroChina Co. and Cnooc Ltd. completing their biggest weekly gains since April as crude traded above $50 a barrel. Cheung Kong Infrastructure Holdings Ltd., which gets almost a third of its revenue from the U.K., slid to a three-month low after a plunge in the pound. Hong Kong will be shut for a holiday on Monday, when Chinese markets reopen after a week-long break.

Oil has gained about 13 percent since the Organization of Petroleum Exporting Countries agreed Sept. 28 to cut production for the first time in eight years. This week’s rally by China H shares helped the benchmark index climb back into gains for the year, with a 2.7 percent advance. By contrast, the Shanghai Composite Index is still down 15 percent. Stocks in Hong Kong dipped lower on Friday after the pound fell as much as 6.1 percent and traders braced for the release of U.S. jobs data that may bolster the case for an interest-rate increase this year.

Locking in Gains

“Short-term profit taking is a high possibility as some investors are likely to lock in gains ahead of U.S. jobs data and also with the Hong Kong market off Monday,” said Linus Yip, a Hong Kong-based strategist at First Shanghai Securities Ltd.

The Hang Seng Index dropped 0.4 percent, paring its weekly advance to 2.4 percent. Along with energy companies, Galaxy Entertainment Group Ltd. and China Life Insurance Co. are the best performers this week. China Resources Land Ltd. has fallen 6.5 percent to lead mainland developers lower after cities announced curbs to cool a surge in home prices.

Cheung Kong Infrastructure, owned by billionaire Li Ka-shing, slid 1.4 percent on the day, while CK Hutchison Holdings Ltd., which generated 37 percent of earnings from the U.K. in 2015, dropped 0.7 percent. The pound sank as low as $1.1841, the weakest since March 1985.

In China, the nation’s foreign-exchange reserves declined to $3.17 trillion in September, central bank data show, falling below the median estimate of $3.18 trillion in a Bloomberg survey of economists. The offshore yuan has weakened 0.52 percent against the dollar this week, the biggest drop in more than a month.

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