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Shanghai surge drags Hong Kong shares from doldrums

Shanghai surge drags Hong Kong shares from doldrumsHONG KONG: Hong Kong stocks closed 0.13 percent lower Monday, clawing back early losses after Shanghai surged almost five percent on hopes of an overhaul of state-owned companies and more market support for shares.

The benchmark Hang Seng Index lost 31.35 points to end the day at 24,521.12 on turnover of HK$ 80.28 billion (US$ 10.36 billion). It had opened down 1.69 percent.

Hong Kong was given a boost by a surge in Shanghai, where equities rallied their most in a month on hopes that plans to merge two major shipping enterprises could herald a shake-up of the country’s inefficient state-owned enterprises.

The benchmark Shanghai Composite Index closed up 4.92 percent, or 184.22 points at 3,928.42 on turnover of 652.6 billion yuan ($ 106.7 billion).

The Shenzhen Composite Index, which tracks stocks on China’s second exchange, jumped 4.49 percent, or 97.69 points, to 2,274.84 on turnover of 574.8 billion yuan.

China Ocean Shipping (Group) Co., known as Cosco, and China Shipping (Group) Co. are expected to merge some or all of their businesses, Bloomberg News reported, quoting people familiar with the matter.

Analysts said the move could herald a broader overhaul of the state-run companies that dominate Asia’s largest economy, as China struggles to boost tepid growth.

China Shipbuilding Industry Co., China Coal Energy Co., and China United Network Communications Ltd. all surged by the 10 percent daily limit.

Railway firms were also higher. China Railway Construction soared 9.49 percent to 18.34 yuan while China Railway Erju climbed 8.31 percent to 17.07 yuan.

“Though the economy as a whole is not performing quite well, it may lead to more loosening of monetary policy,” Zhang Qi, an analyst from Haitong Securities, told AFP.

“There might also be more state investment and reform of state-owned enterprises.”

Gloom about the outlook for China’s economy worsened after official data showed Saturday that both exports and imports fell more than eight percent from a year earlier in July.

Inflation rose 1.6 percent in the same month, well below the government’s annual target of three percent, while producer prices hit their lowest level since late 2009, data also showed on Saturday.

Beijing has unleashed unprecedented measures to support equities — a crackdown on short-selling, suspension of new offerings and a ban on selling by major shareholders — since its main share market collapsed in mid-July.

Stocks were helped on Monday after China’s securities regulator, in a fresh move, said it had called on securities brokers and fund managers to help stabilise the market.

“Chinese equities are rallying today on the idea of further easing measures, while there is also talk the stability fund will likely get a nice top-up,” said Chris Weston at IG Markets.

In Hong Kong, Ping An rose 1.25 percent to HK$ 44.6 and China Mobile added 0.89 percent to HK$ 101.8, while HSBC fell 1.55 percent to HK$ 69.95.

Copyright AFP (Agence France-Presse), 2015

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