Monday, 30 March 2015 18:11
HONG KONG: Shares in Hong Kong and Shanghai surged Monday after the head of China’s central bank hinted at further monetary easing measures to boost the mainland economy.
Hong Kong’s benchmark Hang Seng Index rose 1.51 percent, or 368.92 points, to 24,855.12 on turnover of HK$ 140.80 billion ($ 18.17 billion).
People’s Bank of China governor Zhou Xiaochuan told the Boao Forum on Sunday that “we need to be vigilant to see if the disinflation trend will continue, and if deflation will happen or not”, according to Bloomberg News.
He added: “China can have room to act,” both with interest rates and “quantitative” measures.
The bank has already cut interest rates twice since November and reduced the amount of cash lenders must keep in reserve.
“The PBOC governor signalled his concern over growth and we think they will do more in terms of stimulus,” said Tim Condon, Singapore-based head of Asian research at ING Groep.
Premier Li Keqiang has previously said the government had enough firepower to protect the economy if it continues to slow too quickly. Growth in 2014 came in at its slowest pace in almost a quarter of a century
Buying was also boosted after China on Friday said it would expand the number of domestic fund-management firms allowed to buy Hong Kong stocks through the existing “Shanghai-Hong Kong Stock Connect” scheme.
The market watchdog, China Securities Regulatory Commission, said it would relax some restrictions for domestic fund managers to use the scheme, which has seen a tepid response since starting in November to much fanfare.
The news sent turnover surging in Hong Kong as mainland traders piled in. Hong Kong Exchange and Clearing surged 7.94 percent to HK$ 193.00.
Tencent rallied 1.97 percent to HK$ 144.70, insurer China Life jumped 5.24 percent to HK$ 34.05 and CNOOC added 2.86 percent to HK$ 10.80.
China Mobile was up 0.55 percent at HK$ 100.50, Henderson Land gained 1.30 percent to HK$ 54.60 and Cathay Pacific put on 0.23 percent to HK$ 17.78.
In mainland China the benchmark Shanghai Composite Index jumped 2.59 percent, or 95.47 points, to 3,786.57 — its highest close since March 2008 — on turnover of 692.1 billion yuan ($ 112.7 billion).
The Shenzhen Composite Index, which tracks stocks on China’s second exchange, rose 0.64 percent, or 12.47 points, to 1,948.06 on turnover of 507.0 billion yuan.
“Investors’ expectations of more monetary easing were reinforced after Zhou’s comments,” Central China Securities strategist Zhang Gang told AFP.
Construction companies led the gains. In Shanghai, China Railway Construction jumped 7.61 percent to 19.24 yuan and China Railway Erju gained 3.16 percent to 24.14 yuan.
Banks were also higher in Shanghai. Banking giant ICBC rose 4.46 percent to 4.92 yuan and Agricultural Bank of China added 2.75 percent to 3.74 yuan.
China Construction Bank gained 3.34 percent to 6.19 yuan in Shanghai after reporting on Friday a rise in 2014 net profit.
Copyright AFP (Agence France-Presse), 2015
