HONG KONG (Nikkei Markets) -- Hong Kong shares headed for a third straight day of advances after U.S. indexes rose to fresh record highs overnight. Mainland companies listed in the city extended gains following the Chinese central bank's move to boost lending in Asia's largest economy.
The Hang Seng Index had risen 0.8% to 28,386.32 by midday on Wednesday. Mainland financial stocks were among the most actively traded for a second day. This comes on the heels of the People's Bank of China's announcement that it would reduce the reserve requirement ratio by 50 to 150 basis points for some lenders, effective January 2018, depending on the percentage of their loans to small businesses and the agricultural sector.
A gauge of mainland companies listed in the city rose 1% after jumping 3.6% on Tuesday. Chinese markets are shut this week for the National Day holidays and Hong Kong will be closed on Thursday.
"Mainland banks continue to lead the market after the Chinese central bank announced plans to lower reserve requirements for some lenders," said Andrew Wong, chairman of financial services company Anli Holdings. However, the gains may be overdone, he said, as the reduction in the reserve ratio was "not that significant." Wong expects the news to keep lifting shares short-term, but sees resistance for the Hang Seng around the 28,600-point level.
Most regional markets advanced after U.S. indexes closed at lifetime highs for a second consecutive day on Tuesday, led by gains in airlines and carmakers ahead of the September quarter corporate earnings season in North America. The Nikkei Asia300 Index rose 0.3% on Wednesday.
China Evergrande Group rose 2.4%, extending Tuesday's 8.8% gain, after Chinese Estates Holdings said it had bought 788.7 million Evergrande shares between April and Oct. 3 for about HK$2.6 billion ($332.9 million). Chinese Estates advanced 1.7%. Separately, China Evergrande on Tuesday reported a 6.7% drop in contracted sales for September.
Bulk commodity trader China Public Procurement fell 10.2% to 26.5 Hong Kong cents after announcing a share issue of 268.6 million shares at 23.7 Hong Kong cents apiece.
Automotive engine maker Xinchen China Power Holdings surged 24.6% after its unit Mianyan Xinchen bought assets worth 119.4 million yuan ($17.9 million) from BMW Brilliance Automotive.
New Concepts Holdings, which is engaged in foundation work, rose 0.5% after saying it had entered into an agreement to issue $5 million in convertible bonds to Forest Water Environmental Engineering.
Real estate site formation company Cherish Holdings rose 6%. Late Tuesday, the company said majority shareholder Waterfront Palm sold 110 million shares in September. After the sale, Waterfront holds about 51.8% of Cherish's issued share capital.
Trading in Television Broadcasts was halted pending an announcement on Wednesday. The company's shares rose 1.7% on Tuesday.