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Nikkei Markets

Hong Kong shares jump on US rally, China policy support hope

Chinese property developers and infrastructure companies advance

HONG KONG (Nikkei Markets) -- Hong Kong shares jumped on Friday after a technology stock-driven rally spurred U.S. equity indexes to fresh lifetime highs, with Chinese companies listed in the city also bolstered by expectations for policy support from Beijing.

The Hang Seng Index added 1.2% to 28,193.40 by noon. Internet services major Tencent Holdings climbed 1.8%, contributing most to the gauge's gains by points, after the technology-heavy Nasdaq Composite rose above the 9,000-point mark for the first time ever. AIA Group added 1.6%. The pan-Asia insurer said it intends to convert its Shanghai branch into a wholly owned subsidiary, following Beijing's decision to remove shareholding restrictions on life insurers from Jan. 1, 2020.

Among other major financial companies, China Construction Bank rose 1.7% while China Life Insurance rose 1.2%.

In the mainland, the Shanghai Composite Index rose 0.9% after advancing 0.9% on Thursday amid lingering hopes for fiscal and monetary support from Beijing. China plans to invest 1.8 trillion yuan ($257 billion) on highways and waterways in 2020, in addition to 800 billion yuan on railways, Chinese Minister of Transport Li Xiaopeng said on state radio on Thursday, according to Reuters. Premier Li Keqiang said earlier this week the government will consider measures to lower financing costs for smaller companies, including via targeted cuts in banks' reserve requirement ratios, according to media reports.

Meanwhile, data released on Friday showed China's industrial profits rose 5.4% in November from a year ago, against a 9.9% drop in October.

"The advance is not overdone," said Tracy Chan, an analyst at KGI Asia, drawing attention to favorable capital inflows into emerging markets, optimism over the mainland economy and expectations for monetary easing by the People's Bank of China.

Mainland property developers listed in the city rallied after Beijing Thursday reportedly signaled it will ease restrictions to gaining residency in China's smaller cities. Country Garden Holdings and China Resources Land rose 3.2% and 1.8%, respectively, while Sunac China Holdings jumped 4.8%. Infrastructure companies China Railway Construction Corp. and China Railway Group advanced 1% and 0.8%, respectively.

"The easing of the trade war could help stabilize the Chinese economy, and we could see more supportive policies," she said.

The Hang Seng Index has been hovering near five-month highs after trade tensions between the world's largest economies eased. China's commerce ministry spokesman Gao Feng on Thursday reportedly said Beijing is in close touch with Washington regarding the signing of the phase one agreement. U.S. President Donald Trump on Tuesday said he and Chinese President Xi Jinping will hold a signing ceremony to seal the deal agreed on earlier in December.

Meanwhile, anti-government protests in Hong Kong continued over the Christmas and Boxing Day holidays, with police and demonstrators clashing in some of the city's malls.

Guangzhou Automobile Group added 2.5% in Hong Kong. The company on Tuesday said it signed an agreement with SAIC Group to work together on technology research and development, resource coordination, investment, market expansion and international operations, among other things. Financial terms of the agreement were not disclosed.

China South City Holdings climbed 4.3% after the property developer said it agreed with Wanda Group to develop Wanda Plaza at China South City Shenzhen.

Luye Pharma Group rose 1.7% after saying it submitted a new drug application to the U.S. Food and Drug Administration for a depression treatment drug.

-- Benny Kung

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