HONG KONG (Nikkei Markets) -- Hong Kong stocks climbed to fresh two-year highs on Monday, cheering upbeat Chinese economic data and shrugging off a small-cap tumble that weighed on mainland-traded equities.
The Hang Seng Index rose 0.3% to 26,470.58, paced by Chinese companies traded in the city, to consolidate its position as one of Asia's best equity benchmarks this year. The Hang Seng China Enterprises Index added 0.5%, aided by data showing the mainland economy expanded by a more-than-expected 6.9% last quarter, with June retail sales and industrial output also beating estimates.
China Life Insurance and Ping An Insurance Group gained 2.3% or more, while China Resources Land jumped 5.1%, the most since February. Henderson Land Development rallied 3.3%, leading local developers on speculation the U.S. Federal Reserve will stay on a path of gradual monetary tightening.
"The bull run has lasted quite a few days now. A number of bearish contracts have expired because the Hang Seng Index is going up," said Louis Tse, a director at VC Brokerage in Hong Kong. He cautioned the advances may not be sustained as investors "look at China's performance as well."
Trading on mainland bourses provided a stark contrast with Hong Kong. The ChiNext index of small-company shares plunged 5.1% for its steepest drop this year, amid concern upcoming initial public offerings might weigh on stocks already listed as investors sell them down to chase new listings. Only one of the gauge's 88 constituents advanced on Monday, while 16 plunged by the day's 10% limit.
The China Securities Regulatory Commission last week approved a total of nine new IPOs in Shanghai and Shenzhen, adding to the nearly 250 new listings that the two bourses saw in the first half of 2017. New listings in China typically offer strong returns, surging by the 44% limit on debut.
The Shenzhen Composite slumped 4.3%. The Shanghai Composite gave up 1.4% in volatile trading that saw the gauge nearly erase morning-session losses by the midday break before selling ensued in the afternoon. Among the day's notable decliners, liquor maker Kweichow Moutai lost 1.4%, while China State Construction Engineering and Poly Real Estate shed at least 2%.
Several heavyweight stocks rallied after the day's economic data release, supporting the benchmark index amid the small-cap selloff. Shanghai-listed shares of Industrial & Commercial Bank of China (ICBC), Agricultural Bank of China (ABC) and PetroChina jumped at least 3%. In Hong Kong, meanwhile, ICBC shares added 0.4%, while PetroChina and Agbank ended unchanged.
Bank of Communications added 0.7% in Hong Kong, after the lender said it plans to invest HK$7.9 billion ($1 billion) to set up a local unit focused on retail and private banking.
Media and publishing company Next Digital surged 18% as trading resumed after the company said it has accepted an indicative offer from W. Bros Investments for the sale of certain magazine businesses for about HK$500 million.
Wanda Hotel Development, a member of billionaire Wang Jianlin's property-to-media conglomerate, tumbled 7.3%. China plans to punish Dalian Wanda Group for breaching the nation's restrictions on overseas investments by cutting off funding, Bloomberg reported, citing people familiar with the matter.
Datang International Power Generation fell 2%, paring its gains this year to 23%. The company said late Friday its power generation climbed about 10.5% in the first half of 2017.
Shandong Molong Petroleum Machinery gained 4.1% after revising upwards its forecasts for the half-year ended June 30. The company said it now expects of up to 10 million yuan, compared with its previous projection of a half-yearly loss.
Winox Holdings jumped 15% after saying during Monday's midday break that it expects a 140% jump in first-half profits, driven by higher sales of watch bracelets and mobile phone cases.
Best Pacific International Holdings tumbled 17%. The fabric manufacturer said its profit for the six months ended June 30 should be up to 30% lower than in the year-ago period.
Online game developer Boyaa Interactive International slid 4.1%. The company's chairman has become a co-defendant in a bribery probe involving its Shenzhen unit, it said in a statement on Friday.
-- Suzannah Benjamin and V. Phani Kumar