Hong Kong’s Stocks Post Longest Weekly Advance in Five Months

  • Mainland investors boost purchases to most this month
  • Energy companies lead gains on Hang Seng Index on oil prices

Hong Kong stocks rose, with the benchmark index posting its third weekly gain, as energy companies advanced after oil rallied and investors speculated China will press ahead with reforms to make state-owned enterprises more efficient.

The Hang Seng Index climbed 0.5 percent to 22,937.38 at the close, taking its weekly gain to 1.9 percent. China Shenhua Energy Co., China Petroleum & Chemical Corp. and PetroChina Co. led the advance, with increases of at least 2.5 percent. China Vanke Co. jump the most since July after saying Shenzhen Metro Group Co. has struck a deal to become the developer’s second-biggest shareholder. The Shanghai Composite Index closed 0.2 percent lower, extending a weekly decline to 1.3 percent.
 
Hong Kong stocks have jumped 6.3 percent since Dec. 23, when the city’s shares began to outperform China’s, as mainland investors looking for non-yuan assets stepped up purchases of stocks via the Shanghai trading link and as data ranging from China’s manufacturing to producer prices showed signs of resilience. The Shanghai Composite Index climbed just 0.1 percent over the same period.

“We can see the money inflow to Hong Kong is still active," said Dickie Wong, executive director of Kingston Securities Ltd. "Money from the mainland will give a boost to the Hong Kong market as long as mainland investors want to hedge further yuan depreciation risk.”

The outperformance of Hong Kong shares lowered the premium of dual-listed mainland stocks to the smallest since October on Wednesday. Net purchases of Hong Kong stocks through the Shanghai link was 1.47 billion yuan ($213 million) on Friday, the most since Dec. 30. The offshore yuan fell for a third straight month in December. China has asked some banks to stop processing cross-border yuan payments until they balance inflows and outflows, people familiar with the matter said, as authorities step up a campaign to curb capital outflows.

A surge in oil prices is helping the energy sector, while optimism on structural reforms has also been a supporting factor, said Ronald Wan, chief executive at Partners Capital International in Hong Kong.

The National Development and Reform Commission will focus on reforms of state-owned enterprises and other areas, spokesman Zhao Chenxin said at a briefing on Thursday. China Insurance Regulatory Commission Chairman Xiang Junbo said in a statement the regulator will promote reforms on product pricing and investment scope.

  • Vanke jumped 5.7% in Hong Kong and 6.9% in Shenzhen. Shenzhen Metro agreed to buy China Resources Co.’s 15.3 percent stake in Vanke for 37.2 billion yuan, or 22 yuan apiece, Vanke said
  • Cnooc rose 2.4%, Sinopec climbed 3.6% to its highest close since July 2015, and PetroChina Co. gained 2.6%, all among top 10 advancers on the Hang Seng Index. Oil futures slid 0.1% in New York after climbing 4.3% the previous two sessions as Saudi Arabia said it cut production more than required by the OPEC
  • The Shenzhen Composite Index dropped 1.6% to its lowest since August. The Chinese government’s scrutiny of insurers’ investments is hurting the stock market because the firms will be more cautious, said Linus Yip, a strategist at First Shanghai Securities Ltd.
  • Mainland investors have purchased a net 21.3 billion yuan of Hong Kong shares through the Shanghai link since Dec. 28, compared with net buying of just 7.09 billion yuan in the previous 12 sessions, according to data compiled by Bloomberg
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