Hang Seng index rose 1.4 pct as Fed likely to take dovish stance

Hong Kong stocks tracked the mainland Chinese markets higher on Monday and closed at a nine-month peak, buoyed by expectations of the U.S. Federal Reserve taking a dovish stance at its policy meeting this week and Beijing rolling out more policy measures to boost growth.

The Hang Seng index rose 1.4 per cent, to 29,409.01, while the China Enterprises Index gained 1.5 per cent, to 11,674.83 points. There are much talk Fed policymakers will lower their interest rate forecasts, or "dot plots", to show little or no further tightening this year.

The Chinese government has additional monetary policy measures that it can take to support economic growth this year, and will even cut "its own flesh" to help finance large-scale tax cuts, Premier Li Keqiang said on Friday. Li's comments suggest Beijing is ready to roll out more stimulus measures to ensure the economy grows within a targeted range of 6.0 to 6.5 per cent.

Developers outperformed with a 2.7 per cent rise, led by Agile Group Holdings which climbed 10.7 per cent. Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.95 per cent, while Japan's Nikkei index closed up 0.62 per cent.

The yuan was quoted at 6.7133 per U.S. dollar at 08:15 GMT, 0.01 per cent firmer than the previous close of 6.714. The top gainers among H-shares were China Resources Land Ltd up 9.13 per cent, followed by China Vanke Co Ltd, gaining 6.95 per cent, and Shenzhou International Group Holdings Ltd, up by 5.06 per cent.

The three biggest H-shares percentage decliners were Anhui Conch Cement Co Ltd, which was down 4.54 per cent, China National Building Material Co Ltd, which fell 4.1 per cent, and CNOOC Ltd, down by 0.8 per cent. About 1.95 billion Hang Seng index shares were traded, roughly 111.6 percent of the market's 30-day moving average of 1.74 billion shares a day. The volume traded in the previous trading session was 2.04 billion. At the close, China's A-shares were trading at a premium of 23.39 per cent over the Hong Kong-listed H-shares.