Hong Kong Stocks Extend Weekly Rally as Shenhua Jumps on PayoutBy
China Shenhua Energy posts its largest gain since 2008
Mainland investors bought most Hong Kong equities this year
Hong Kong stocks rose, extending their best weekly gain since September, as China Shenhua Energy Co. jumped after announcing a special dividend.
The Hang Seng Index added 0.8 percent to 24,501.99, its highest close since August 2015. Shenhua posted its biggest gain since 2008. China Mobile Ltd. and Tencent Holdings Ltd., which are both scheduled to report earnings this week, rose at least 2.7 percent. The Shanghai Composite Index advanced 0.4 percent at the close, after falling on Friday by the most this year.
Hong Kong is entering its peak season for earnings releases, with more than 275 companies announcing their financial results this week, including heavyweights Tencent and Cnooc Ltd. The Hang Seng Index climbed 3.2 percent last week, boosted by global optimism over a dovish Federal Reserve. Mainland investors bought a net 13 billion yuan ($1.9 billion) of Hong Kong stocks last week through exchange links, the most this year. Their net purchases totaled 3.73 billion yuan on Monday.
"The market is chasing companies with high cash levels that may announce dividend payouts,” said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. Southbound flows through the stock links are likely to continue amid concerns about yuan depreciation after the Fed raised interest rates, he said.
The Hang Seng China Enterprises Index advanced 0.7 percent to its highest closing level since November 2015, as automakers and insurers gained.
- China Shenhua rose 16% in Hong Kong. The company proposed a final dividend of 0.46 yuan per share for 2016, as well as a special dividend of 2.51 yuan per share.
- China Mobile jumped 3.7% in Hong Kong and Daqin Railway Co. climbed 3.1% in Shanghai. Investors are speculating China Mobile may issue a higher fiscal year dividend compared with the previous period after China Shenhua’s payout surprise, said Alex Ng, Hong Kong-based analyst at China Merchants Securities Co.
- Southwest Securities Co. slumped 4.8% in Shanghai, after saying it had received a notification of investigation from China’s securities regulator.
- China Resources Land Ltd. and China Overseas Land & Investment Ltd. fell at least 1.6% in Hong Kong. Cities including Beijing, Changsha and Guangzhou tightened housing rules since Friday, with measures including raising down-payment requirements and temporarily banning buying second homes by non-local residents in some areas. Property shares also slid in Shanghai, with Beijing Capital Development Co. falling 1.5%.
- China National Nuclear Power Co. added 2% and China Nuclear Engineering Group Corp. climbed 3.4% in Shanghai. The two nuclear power developers said they plan to merge.
- Belle International Holdings Ltd. lost 3.3% in Hong Kong, its largest drop in more than three months, after the footwear retailer said preliminary full-year net income probably slid as much as 25%.
- China ZhengTong Auto Services Holdings Ltd. jumped 7.8% in Hong Kong. Earnings at the company will revive this year as its expanded dealership services benefit from an increase in luxury demand, China International Capital Corp.’s analysts Wei Feng and Danlin Ren write while upgrading the stock to buy.
- Meitu Inc. slumped 11% after surging as much as 28%. The shares may be volatile ahead of its earnings release on March 24, according to Alex Ng at China Merchants Securities.
— With assistance by Sofia Horta E Costa