China support talk drives HK shares up 2.9 pct
Hong Kong stocks rose 2.9 percent on Friday, as U.S. stock futures pointed to a recovery on Wall Street and talk swirled of another round of rate cuts in China, sending mainland lenders soaring.
But the main index finished the week 6.5 percent lower, its worst weekly performance in three weeks, on bleak economic data, job losses at top banks and the U.S. auto industry’s woes.
“Plenty of rumours are doing the rounds today, but the one that got the market excited was about a 100 basis points cut in the reserve ratio at Chinese banks and 54 basis points cut in interest rates,” said Sean Tsang, senior vice president with Polaris Securities.
China has cut the reserve requirement at its banks twice this year compared with three reductions in the lending rate since September.
“The government is also expected to increase the size of the stimulus plan, but the validity of and efficiency of such a plan remains questionable,” he said, referring to the government’s plan to pump 4 trillion yuan ($586 billion) into the economy to support growth.
China Construction Bank (0939.HK: Quote, Profile, Research, Stock Buzz), which had fallen 12.7 percent in the previous three sessions on talk that Bank of America may dilute some of its holding in the Chinese lender, jumped 6.1 percent. No.2 lender Bank of China (3988.HK: Quote, Profile, Research, Stock Buzz) climbed 5.9 percent.
The benchmark Hang Seng Index .HSI ended the session up 360.64 points at 12,659.20 after opening nearly 4 percent lower. The index, which has dropped 55 percent so far this year, had risen more than 6 percent earlier in the day, partly on hopes that a solution may be found to problems facing U.S. banking giant Citigroup (C.N: Quote, Profile, Research, Stock Buzz), which lost half its market value this week.
“There is a technical explanation for the rally, with the Dow Jones average .DJI having fallen more than 10 percent this week investors are hopeful about a recovery tonight and the stock futures are pointing in that direction,” said Patrick Shum, strategist with Karl Thomson Securities.
Tags: brokers, China Construction Bank, China-Enterprises-Index, Citigroup, HK, reserve-ratio, Share, StockPages: 1 2
