Thursday, 09 July 2015 12:38
HONG KONG: Hong Kong stocks surged more than three percent by the break Thursday on bargain-hunting, while mainland China’s markets ended a wildly volatile morning session in positive territory.
The Hang Seng Index gained 3.43 percent, or 805.67 points, to 24,322.23.
Hong Kong has been buffeted by a rout in China that has also spread into regional markets, as well as fears for Greece’s future in the eurozone.
With Shanghai struggling, Chinese investors pulled out of Hong Kong — where multiple mainland firms are listed — sending it plunging almost six percent in its worst single-day performance since November 2008, the height of the global financial crisis.
Thursday’s rally came as Shanghai swung six percent from losses to gains after China annnounced more measures to try to staunch a sell-off that has seen more than 30 percent wiped from mainland shares and fanned fears about the wider economy.
The Shanghai Composite Index went into the break 1.28 percent, or 47.18 points, higher at 3,722.833.
Analysts said Hong Kong’s bounce came as shareholders snapped up falling stocks in their own firms.
“Some major shareholders of the companies (listed in Hong Kong) increased their shareholdings, so this gave the markets confidence,” said financial analyst Kevin Tam of Core Pacific-Yamaichi.
“The valuations have become attractive.”
Hong Kong shares were sent into orbit at the start of April when Chinese authorities relaxed rules on southbound trading for mainland investors, using a stock link-up between the city’s exchange and Shanghai.
Tam said Hong Kong stocks would remain closely tied to the mainland market.
“At least in the short-term there’s initial sign of stabilisation,” he added.
Hong Kong’s leader Leung Chun-ying attempted to reassure investors Thursday, saying that the city was a “mature” market.
But he added that Hong Kong’s economy was “closely bound up” with the mainland economy, as well as the United States and Europe.
“We cannot underestimate Hong Kong’s risks at this point in time. We cannot think that economic prosperity is a given,” he said.
Internet giant Tencent surged 7.57 percent to HK$ 145, China Mobile rose 3.11 percent to HK$ 92.75. Casino operator Sands China jumped 3.74 percent to HK$ 29.1.
Industrial and Commercial Bank, the world’s biggest lender, was up 1.46 percent at HK$ 5.58.
On Thursday Chinese police and security regulators launched a joint probe into “vicious short-selling”. Short selling involves selling an asset the trader does not own in anticipation of a fall in its price.
Late Wednesday, China’s market regulator barred major shareholders and executives of listed companies from selling their shares for the next six months, the latest government action to stem a slide in the markets.
While China is at the forefront of Hong Kong dealers’ minds, Greece is also on the radar as it prepares to present proposals for overhauling its bailout, with a Sunday deadline looming.
European leaders warned that if it does not provide a credible plan it faces a eurozone exit. However, European stocks edged up Wednesday on hopes a deal will eventually be reached.
