Hong Kong stocks surge as finance, property sector shows growth
Stocks in Hong Kong gained on Monday, shrugging off losses in Mainland China, as investors saw signs of the U.S. Federal Reserve slowing its pace of hiking interest rates. The expectation lifted sectors sensitive to interest rates, such as financials and property.
The market was lifted by the expectation of a more dovish stance at the U.S. Federal Reserves. U.S. inflation pressure has eased thanks to lower oil prices, sparking hopes for fewer-than-expected interest rate hikes next year, said Steven Leung, director of sales at the brokerage UOB Kay Hian in Hong Kong.
"There will not be as much pressure to hike three or four times next year," he said.
Federal Reserve Chairman Jerome Powell will speak on Wednesday, a day after Vice Chairman Richard Clarida.
Interest rate-sensitive stocks drove higher on the back of this optimism. The financial sector gained 1.6 per cent and the property sector jumped almost 2 per cent.
The IT sector rose 1.35 per cent, tracking the wider market. But the IT hardware sub-index, under the shadow of prolonged trade tensions, lost 0.7 per cent.
The energy sector was an outlier. Dragged by pressure on oil prices, the sub-index of the Hang Seng tracking energy shares dipped 0.1 per cent.
Around the region, MSCI's Asia Pacific ex-Japan stock index was firmer by close to 1 per cent, while Japan's Nikkei index closed up 0.8 per cent.
Expectations of a more dovish Fed helped cancelled the downward pressure from Chinese equities, which dropped for the third straight session on Monday, dragged down by energy shares, trade war risks and worries over economic growth.
Hong Kong stocks are set to stay up by the end of November, after closing down for six consecutive months, said Ben Kwong, Hong Kong-based head of research at KGI Asia.
"It would be quite rare for the Hang Seng to be down for seven months in a row," he said. "I think the index will be somewhere between 26,500 points to 26,700 points by the end of the month, depending on how the trade talks go."
The top gainer on the Hang Seng was Galaxy Entertainment Group Ltd, which rose 4.4 per cent, while the biggest loser was China Resources Land Ltd, which fell 1.5 per cent.
The top gainers among H-shares were ZhongAn Online P & C Insurance Co Ltd, up 6.7 per cent, followed by China Gas Holdings Ltd, gaining 6.4 per cent, and Huaneng Power International Inc, up by 4.3 per cent.
The yuan was quoted at 6.9361 per U.S. dollar at 09:01 GMT, 0.2 per cent firmer than the previous close of 6.9499.
At the close, China's A-shares were trading at a premium of 16.38 per cent over the Hong Kong-listed H-shares.
(With inputs from agencies.)