Hong Kong index surge to nine month high over better industrial activity

Hong Kong shares rose to their highest point in nine months on Monday after China reported better-than-expected industrial activity and as the Sino-U.S. trade talks appeared to be making progress. At the close of trade, the Hang Seng index was up 1.8 per cent at 29,562.02, the highest since June 2018. The Hang Seng China Enterprises index rose by 1.6 per cent.

The sub-index of the Hang Seng tracking energy shares rose 1.7 per cent, while the IT sector climbed 0.8 per cent, and the financial sector ended 2 per cent higher. The property sector rallied 2.7 per cent on the brighter economic outlook in China and hopes for a softer U.S. interest rate policy. Factory activity in China unexpectedly grew for the first time in four months in March, both official and private surveys showed, suggesting government stimulus measures may be starting to take hold.

Chinese Vice Premier Liu He is scheduled to visit Washington this week to resume the negotiations. On Sunday, China said it would continue to suspend additional tariffs on U.S. vehicles and auto parts after April 1. China's main Shanghai Composite index rose 2.6 per cent to its 10-month high. The blue-chip CSI300 index rose 2.6 percent to its highest level in over a year. Around the region, MSCI's Asia ex-Japan stock index was firmer by 1 per cent, while Japan's Nikkei index closed up 1.4 per cent.

The top gainer on the Hang Seng was BOC Hong Kong Holdings Ltd, which gained 6.5 per cent. The banking group reported a 12 per cent rise in 2018 net profit. The Hong Kong dollar continued to be weak, owing largely to a widespread between local and U.S. borrowing rates. The Hong Kong Monetary Authority bought HK$4.97 billion of the currency on Saturday morning, its seventh intervention in a month.

About 2.55 billion Hang Seng index shares were traded. The volume traded in the previous trading session was 2.78 billion. The short and one-factor leveraged Hang Seng index, which is designed to replicate the payoff of a short or leveraged portfolio and is linked to the movements of the Hang Seng Index, was lower by 1.72 per cent on the day at 4,653.87 points.