Chinese Stocks Climb to Three-Week High as Financial Firms Jump

  • Vanke leads H-share gauge after Evergrande raises its stake
  • Banks are popular bets because yuan seen stabilizing: CMB

A measure of Chinese companies traded in Hong Kong rose to its highest level in three weeks as banks and property companies advanced amid speculation the yuan is stabilizing.

The Hang Seng China Enterprises Index added 0.2 percent at the close. China Vanke Co. was the top performer after China Evergrande Group lifted its stake in the company. China Citic Bank Corp. and China Construction Bank Corp. led gains by financial firms. Chow Tai Fook Jewellery Group Ltd. rallied after the world’s largest publicly traded jewelry chain reported profit fell less than a year earlier. CT Environmental Group Ltd. suspended trading in its shares in the wake of a plunge after activist short-seller Glaucus Research Group published a negative report.

The Hang Seng China Enterprises Index has rebounded almost 4 percent in the past four days as the pace of yuan depreciation slowed. A measure of H-share volatility climbed to the highest since May this week as Donald Trump’s victory lifted the greenback and boosted the odds of a U.S. interest-rate hike next month. The yuan has tumbled more than 3 percent this quarter before holding declines at around 6.89 per dollar.

"One of the drivers for Chinese banks is the stabilizing yuan," said Daniel So, a strategist at CMB International Securities in Hong Kong. "Over the past two weeks the U.S. dollar has been very strong and the yuan has been weak, and that had put downward pressure on Chinese stocks in general. Now that the depreciation of the yuan is having a pause, that’s lending some support to Chinese stocks."

The Hang Seng China Enterprises Index climbed to 9,665.99, while the Hang Seng Index was little changed. The Shanghai Composite Index slipped 0.2 percent.

Jeweler’s Jump

Chow Tai Fook jumped 8.8 percent. The company reported first-half profit fell 22 percent, a smaller decline than a year earlier as the world’s largest publicly traded jewelry chain negotiated lower rents and shuttered weaker stores amid tepid Chinese demand for luxury goods.

CT Environmental slumped 13 percent before being suspended from trading. Glaucus questioned the wastewater company’s accounting and said its stock is poised to drop 82 percent. CT Environmental is preparing a formal statement in response to the report that will be filed to the Hong Kong bourse today, according to Sasha Zeng, a Guangzhou-based investor relations manager. Glaucus said it has a short interest in CT Environmental and stands to realize “significant gains” if shares decline.

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