Steady growth continues as Hong Kong shares hit 10 month high amid China trade talks progress

Hong Kong stocks closed at near 10-month highs on Wednesday, aided by more evidence of economic recovery on the mainland and signs of progress in U.S.-China trade talks. The Hang Seng index rose 1.2 per cent to 29,986.39, while the China Enterprises Index gained 1.4 per cent to 11,705.16, its highest close since June 15, 2018.

Activity in China's services sector picked up to a 14-month high in March as demand improved at home and abroad, a private business survey showed on Wednesday, adding to signs that government stimulus policies are gradually kicking in. ** The findings were largely in line with those of an official gauge on the non-manufacturing sector released on Sunday, which showed services activity picked up in March as new orders rose more quickly.

China's central bank is expected to cut banks' cash reserve requirements again soon to bolster financial system liquidity as it looks to support the slowing economy, analysts said, as market speculation over another policy move grows. Investors also cheered the progress in Sino-U.S. trade talks.

The United States and China "expect to make more headway" in trade talks this week, White House economic adviser Larry Kudlow said on Tuesday. Stocks rallied across the board, led by materials and IT firms.

The Hang Seng IT index climbed 2.8 per cent, as gaming giant Tencent ended up 3.3 per cent at an eight-month high. Around the region, MSCI's Asia ex-Japan stock index was firmer by 1.02 per cent, while Japan's Nikkei index closed up 0.97 per cent.

The yuan was quoted at 6.7075 per U.S. dollar at 08:16 GMT, 0.22 per cent firmer than the previous close of 6.7225. The top gainers among H-shares were Guangzhou Automobile Group Co Ltd up 4.85 per cent, followed by Huatai Securities Co Ltd, rising 4.29 per cent and China National Building Material Co Ltd, up by 4.07 per cent.

The three biggest H-shares percentage decliners were China Telecom Corp Ltd, which was down 3.36 per cent, China Gas Holdings Ltd, which fell 1.8 per cent and CNOOC Ltd, down by 0.9 per cent. About 2.08 billion Hang Seng index shares were traded, roughly 101.9 per cent of the market's 30-day moving average of 2.04 billion shares. The volume traded in the previous trading session was 1.92 billion.

At the close, China's A-shares were trading at a premium of 25.01 per cent over the Hong Kong-listed H-shares.