Shanghai, HK shares up as China skips rate hike for now
Tuesday, 14 December 2010
HONG KONG/SHANGHAI, Dec 13 (AP): Shares in Shanghai and Hong Kong rose Monday on relief that Beijing did not raise interest rates at the weekend, opting instead for a further increase in banks' reserve ratios.
Shanghai stocks ended 2.9 per cent higher, while Hong Kong's Hang Seng index closed up 0.7 per cent.
Chinese stocks have wobbled in recent weeks on fears that a rate rise was imminent as inflationary pressures accelerated. Data at the weekend showed consumer prices rose at the fastest pace in 28 months.
Late last Friday, the central bank raised lenders' reserve requirements for the third time in a month to absorb more liquidity from the system, a move which investors interpreted as official reluctance to raise interest rates again this year after a surprise hike in October. Commodity-related plays, in particular energy stocks, also outperformed in both Shanghai and Hong Kong as the latest economic data from China and the US pointed to a healthier global economy.
Those gains helped Shanghai's key stock index post its best gain in two months, climbing to 2,922.9 points as turnover rebounded from the lacklustre levels in recent weeks, when many investors took to the sidelines on fears of a rise in benchmark rates.
"There is unlikely to be another interest rate rise within the year," said Zheng Weigang, senior trader at Shanghai Securities. "The market has room for a rebound, so this is an opportunity for some gains."
Heavyweight energy issues saw active interest, with oil major Sinopec Corp, the biggest boost to the index, up 3 per cent. China Shenhua the world's most valuable coal producer, jumped 3.4 per cent.
Despite the hike in banks' reserve requirements, the financial indexes in Shanghai and Hong Kong rose 1.7 per cent and 0.6 per cent, respectively.
Shares of energy shares and property developers outperformed the broader market in Hong Kong, with real estate developers bolstered by reports of recovering secondary home transactions over the weekend.
The Hang Seng index ended at 23,317.6 points, but overall activity remained subdued with volume in all but 6 counters on the index below their respective average 30-day volumes.
Property developers have underperformed relative to the Hang Seng this quarter as local authorities took steps to curb surging home prices. But they rose Monday on reports that sales volumes had risen to nearly the same levels as those seen before a hike in stamp duty last month.
Heavyweights Sun Hung Property and Cheung Kong Holdings were both up around 1.4 per cent.
Shares of oil major CNOOC rose 1.4 per cent while Sinopec shares in Hong Kong rose 2.7 per cent.
Those gains helped the China Enterprise Index rise 0.7 per cent on the day, in line with the broader market.
The index of top locally listed mainland firms is down about 0.3 per cent on the year, lagging the broader Hang Seng index's 6.6 per cent gain, reflecting concerns about the impact of China's moves to cool its economy earlier this year.
Some market players warn that inflation is going to be a key concern heading into 2011.
"While the A-share market took China's move to not raise interest rates as an excuse to put on more risk, we urge caution," said Martin Haigh, regional head of trading at Standard Chartered in Hong Kong, in an email to clients.
Standard Chartered is still calling for an interest rate hike before year-end and three more in the first half of 2011 as authorities in China struggle to contain inflation, said the bank.
Shanghai stocks ended 2.9 per cent higher, while Hong Kong's Hang Seng index closed up 0.7 per cent.
Chinese stocks have wobbled in recent weeks on fears that a rate rise was imminent as inflationary pressures accelerated. Data at the weekend showed consumer prices rose at the fastest pace in 28 months.
Late last Friday, the central bank raised lenders' reserve requirements for the third time in a month to absorb more liquidity from the system, a move which investors interpreted as official reluctance to raise interest rates again this year after a surprise hike in October. Commodity-related plays, in particular energy stocks, also outperformed in both Shanghai and Hong Kong as the latest economic data from China and the US pointed to a healthier global economy.
Those gains helped Shanghai's key stock index post its best gain in two months, climbing to 2,922.9 points as turnover rebounded from the lacklustre levels in recent weeks, when many investors took to the sidelines on fears of a rise in benchmark rates.
"There is unlikely to be another interest rate rise within the year," said Zheng Weigang, senior trader at Shanghai Securities. "The market has room for a rebound, so this is an opportunity for some gains."
Heavyweight energy issues saw active interest, with oil major Sinopec Corp, the biggest boost to the index, up 3 per cent. China Shenhua the world's most valuable coal producer, jumped 3.4 per cent.
Despite the hike in banks' reserve requirements, the financial indexes in Shanghai and Hong Kong rose 1.7 per cent and 0.6 per cent, respectively.
Shares of energy shares and property developers outperformed the broader market in Hong Kong, with real estate developers bolstered by reports of recovering secondary home transactions over the weekend.
The Hang Seng index ended at 23,317.6 points, but overall activity remained subdued with volume in all but 6 counters on the index below their respective average 30-day volumes.
Property developers have underperformed relative to the Hang Seng this quarter as local authorities took steps to curb surging home prices. But they rose Monday on reports that sales volumes had risen to nearly the same levels as those seen before a hike in stamp duty last month.
Heavyweights Sun Hung Property and Cheung Kong Holdings were both up around 1.4 per cent.
Shares of oil major CNOOC rose 1.4 per cent while Sinopec shares in Hong Kong rose 2.7 per cent.
Those gains helped the China Enterprise Index rise 0.7 per cent on the day, in line with the broader market.
The index of top locally listed mainland firms is down about 0.3 per cent on the year, lagging the broader Hang Seng index's 6.6 per cent gain, reflecting concerns about the impact of China's moves to cool its economy earlier this year.
Some market players warn that inflation is going to be a key concern heading into 2011.
"While the A-share market took China's move to not raise interest rates as an excuse to put on more risk, we urge caution," said Martin Haigh, regional head of trading at Standard Chartered in Hong Kong, in an email to clients.
Standard Chartered is still calling for an interest rate hike before year-end and three more in the first half of 2011 as authorities in China struggle to contain inflation, said the bank.