Chinese Stocks Rise as Insurers, Construction Companies Advance

  • Hang Seng China Enterprises Index increases 1 percent
  • China Railway Group rallies after HSBC advises buying

Are Global Stocks Overdue for a Correction?

Chinese stocks rose in Hong Kong and Shanghai as insurers gained with construction firms amid speculation the outlook for earnings is improving.

The Hang Seng China Enterprises Index rose 1 percent at the close, while the Shanghai Composite Index advanced to a 10-month high. China Life Insurance Co. and New China Life Insurance Co. were among the best performers amid optimism a rising equity market will boost their profits. China Railway Group Ltd. climbed in Hong Kong after HSBC Holdings Plc recommended buying the shares.

Until Monday, Chinese shares in Hong Kong had been diverging from the bullish path of their mainland counterparts. While the Shanghai gauge is up more than 7 percent this quarter, the H-share measure is down 1 percent. Construction companies have led the rally on the mainland as investors bet the government will lift fiscal spending to stimulate growth.

Insurers are gaining as the rally in mainland shares will improve the outlook for their investments and some of the companies’ operating figures have been positive, said Linus Yip, a Hong Kong-based strategist at First Shanghai Securities Ltd. "Infrastructure shares are still being favored as some speculate there will be more policies to stabilize the economy."

The Shanghai Composite Index added 0.8 percent, while the Hang Seng Index gained 0.1 percent.

China Life Insurance surged 7.8 percent in Shanghai, and New China Life Insurance jumped 5.7 percent. Some investors may be accumulating insurance stocks as they usually rebound with the A-share market, according to China Merchants Securities Co. analyst Jerry Li.

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