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Equities

Hong Kong shares rebound after strong China loans data

Chinese lenders make new yuan loans worth $460 billion in January

HONG KONG (Nikkei Markets) -- Hong Kong shares rebounded from a seven-week low on Tuesday, spurred by extended gains in the U.S. and strong credit data from China.

The benchmark Hang Seng Index added 1.3% to 29,839.53, its first gain in three days. Social-media-and-gaming major Tencent Holdings jumped 3.1%, the biggest contributor by points to the gauge, while life insurer AIA Group rose 2.2%. Apple supplier Sunny Optical Technology Group was the top percentage gainer, climbing 5.7% after saying it expects 2017 net profit to more than double from a year ago.

Chinese banks were aided by central bank data showing new yuan-denominated loans in January of about 2.90 trillion yuan ($460 billion), roughly 867 billion yuan higher than the year-ago period. The amount was a record high and blew past expectations, according to Reuters. China's total social financing, a broader measure of credit, almost doubled to 3.06 trillion yuan last month.

Shares in Industrial & Commercial Bank of China, Bank of China and China Construction Bank rose 1.4%, 1.7% and 0.5%, respectively.

The "significantly higher than expected" strength in credit came mainly from an increase in loans to non-banking financial institutions, short-term household loans and corporate bill financing, UBS economists led by Tao Wang wrote in a report.

"As the ongoing deleveraging drive weakens off-balance sheet shadow credit, banks' on-balance sheet loans would expand at a relatively strong pace, possibly beating expectations," she said. "Keep in mind that banks usually rush to lend in the beginning of the year as new loan quota is refreshed, to maximize their earnings from loan business, and hence some credit demand from last December may have been moved to January."

In mainland trading, the Shanghai Composite Index gained 1% while its Shenzhen counterpart added 0.4%. The onshore-traded yuan was down 0.3% at 6.3405 against the U.S. dollar.

Hong Kong International Construction Investment Management Group, controlled by the acquisitive airline-to-property major HNA Holding Group, jumped 7.1% after saying two of its funds agreed to sell their ownership in two land parcels in the city to property major Henderson Land Development for a total of 15.96 billion Hong Kong dollars ($2.04 billion). Henderson Land Development climbed 1.1%.

China Shenhua Energy increased 0.7%, trimming losses for the month to 11.9%, even as it reported a 3.5% fall in commercial coal production in January to 24.6 million tons.

Tianneng Power International added 2.4% after saying it acquired 121.4 million shares in Chaowei Power Holdings between Mar. 1, 2017 and Feb. 12, 2018 for HK$557.6 million. Chaowei Power fell 3.2%.

-- Carrie Chen and Amy Lam

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