HONG KONG (NewsRise) -- Hong Kong shares capped a second weekly advance as strong credit growth data for January boosted China's lenders and optimism over U.S. tax cuts pushed Wall Street equities to fresh all-time highs.
The Hang Seng Index advanced 1.9% over the five-day period even as it dropped 0.3% to 24,033.74 from an 18-month high on Friday. China Construction Bank (CCB) was the week's best performer on the gauge with a 7.4% surge as upbeat lending last month served to ease concern that authorities would target credit to deflate asset bubbles. Agricultural Bank of China (ABC) jumped 8.4% during the week to help lift the Hang Seng China Enterprises Index 2.3% during the period.
Both state-owned lenders fell at least 1.6% on Friday as the Hang Seng and H-share indexes retreated from levels that some traders see as technically overbought. Still, the rally this week and a return to the spotlight marks a change of pace for the nation's top lenders, which despite their large size and ability to generate high profits, trade at valuations of less than seven times their earnings.
"China's banks are benefitting from fund inflows as valuations look quite compelling and there is optimism on earnings in an economy which seems to have stabilized," said Ben Kwong, executive director at KGI Asia.
A string of record highs for benchmark equity indexes on Wall Street amid optimism over President Donald Trump's economic stimulus, as well as increased trading activity by mainland investors over the links connecting Chinese stock exchanges with Hong Kong, contributed to the improved sentiment. The Hang Seng and H-share indexes have jumped at least 9.2% so far this year.
Turnover on the Hong Kong stock exchange's main board moderated to HK$86 billion ($11 billion) Friday after topping HK$100 billion the previous two days.
"Overall, global investor appetite for equities remains quite buoyant and this is helping inflows into Hong Kong markets," Kwong said. "However, the markets are overbought in the short run and a lot of optimism has already been priced in. I think we are due for a period of consolidation."
Mainland Chinese equities, which typically trade at premium valuations to their Hong Kong counterparts, were relatively subdued. The Shanghai Composite Index rose 0.2% this week amid concern over rising bond yields and inflation. The gauge dropped 0.9% on Friday. The yuan traded onshore weakened more than 0.2% to 6.8686 to a U.S. dollar.
AAC Technologies Holdings, a component supplier to Apple, gained 5.6% during the week after the iPhone maker rallied to record highs. The stock slipped 0.1% on Friday.
Heavyweight stock Tencent Holdings added 4.7% since last Friday, with most of those gains coming earlier in the week following reports that it was planning to introduce paid content on its WeChat messaging platform. The stock edged up 0.1% today.
Lenovo Group was the week's worst performer with a 9.6% drop, its worst week since May, after the personal computer and smartphone maker's third-quarter earnings tumbled 67%. The stock fell 3.7% Friday, the worst performer on the Hang Seng Index after Bank of East Asia. The lender slumped 4.1% after reporting a 34% decline in 2016 net income from continuing operations.
The Nikkei Asia300 Index of some of the region's most influential companies fell 0.1% to 1,125.78.
Sands China fell 2% to pare its weekly gain to 1.1%. The gaming company reported a 16.1% drop in 2016 net income to $1.46 billion after the close of the day's trading. Net casino revenue fell during the year because of a decline in revenue from high-rolling gamblers.
-- V. Phani Kumar and Nimesh Vora