Shares in Hong Kong and China rose on Monday with investors snapping up Chinese financial stocks on hopes China’s loose monetary policy will stay in place, while mining shares surged as copper prices surged after a massive quake hit top producer Chile.
China Construction Bank Corp (0939.HK) (601939.SS), the country’s second-largest bank by assets and the most actively traded stock, rose 3.4 percent to a two-week high of HK$6.07 as investors bought the shares following Chairman Guo Shuqing’s comment the bank has no plans to raise fresh capital. It steadied at HK$6.06 by midday, up 3.2 percent.
Top lender ICBC (1398.HK) rose 2.9 percent to HK$5.65.
The benchmark Hang Seng Index .HSI soared 1.90 percent or 391.42 points to 21,000.12 with HSBC (0005.HK), the second-most actively traded stock, gaining 0.82 percent ahead of its earnings next week.
HSBC (0005.HK) is due to announce its results later on Monday. [ID:nLDE61N1VM]. Unit Hang Seng Bank (0011.HK), which is also due to announce its earnings later in the day, rose 1.4 percent, its highest in about six-weeks.
The China Enterprises Index .HSCE of top locally listed mainland Chinese stocks was up 2.54 percent at 11,837.51.
Turnover was at HK$36.9 billion ($4.7 billion) from midday Friday’s HK$30.6 billion.
Jiangxi Copper (0358.HK) rose more than 7 percent to HK$16.90, its highest in five weeks, as copper prices rose amid supply worries after a massive earthquake hit top producer Chile. The stock was at HK$16.70 at the lunch break, up 5.8 percent. Smaller rival Xingye Copper (0505.HK) was up 4.5 percent.
“Short term speculation gave (copper mining) stocks a boost but it is seen to be short-lived,” said Patrick Yiu, a director at CASH Asset Management.
Brokers said investors were covering their short positions, while generally firmer commodities prices also gave support to mining shares. Zijing Mining (2899.HK) was up 2.4 percent and Chalco (2600.HK) rose 2.9 percent.
Copper prices surged at the open on Monday with Shanghai’s benchmark third month copper contract rising by its 5 percent daily limit.
China’s key stock index was up 0.93 percent at midday on Monday, led by copper miners, as a sharper-than-expected slowdown in China’s official purchasing managers’ index boosted expectations that this month’s Chinese parliamentary session would reaffirm a relatively loose monetary policy.
The Shanghai Composite Index .SSEC ended the morning at 3,080.227 points after rising to a five-week intraday high, continuing a 2.1 percent rally in February driven in part by bargain-hunting following the previous month’s 8.8 percent slide.
Copper mining stocks jumped as copper prices rose on supply worries after an 8.8-magnitude earthquake in top producer Chile, with Jingcheng Copper (002171.SZ), one of the morning’s top gainers, surging its 10 percent daily limit to 15.50 yuan.
The official PMI, the first set of Chinese economic data announced for February, fell to 52.0 from 55.8 in January, well below the median forecast of 55.45 in a poll by Reuters of 10 economists.
“The PMI data indicates that the manufacturing sector still has some way to go before it recovers fully from the global financial crisis,” said a trader at a major Chinese brokerage in Shanghai.
“It gives a boost to the market’s belief that the government will reiterate its appropriately loose monetary policy for 2010 at the parliamentary session.”
The annual session of the National People’s Congress, China’s parliament, will begin on Friday. Premier Wen Jiabao will deliver his work report on that day, which investors expect to reaffirm an official policy of relatively easy money in place since 2008.
The Chinese market has generally been weak so far this year amid worries about an official clampdown on excessive bank lending and huge supplies of new shares.
But Monday morning’s rise pushed the benchmark index above the 125-day moving average, now at 3,077 points, for the first time since Jan. 25, indicating market sentiment had greatly improved, analysts said.
However, the index will need to hold above that average, regarded as a barometer of bearish versus bullish sentiment in the Chinese market, for several days to confirm a decisive breakthrough, analysts said.
Monday morning’s sluggish turnover of 63 billion yuan ($9.2 billion), down from Friday morning’s already thin 65 billion yuan, was far from sufficient to support a sustained rally, analysts said.
Gaining Shanghai stocks overwhelmed losers by 739 to 143 on Monday morning, with other copper producers also rising sharply.
Yunnan Copper (000878.SZ) jumped 7.53 percent to 27.42 yuan, Jiangxi Copper (600362.SS) rose 6.93 percent to 37.47 yuan and Tongling Nonferrous Metals Group (000630.SZ) advanced 6.50 percent to 19.82 yuan.