By V. Phani Kumar
HONG KONG (Sep 11) -- Hong Kong shares advanced on Monday, with heavyweight Tencent Holdings hitting an all-time high, as investor appetite for risk improved after North Korea refrained from conducting a missile test over the weekend.
The Hang Seng Index added 1%, its steepest gain this month, to close at 27,955.13. The gains marked a rebound after the 50-stock gauge sank 1% last week, its worst performance in four weeks, on concern that North Korea might be preparing to test fire another ballistic missile to mark its Foundation Day on Saturday. Instead, the North celebrated the 69th anniversary of its founding with a party for the scientists behind the nation's successful test of a hydrogen bomb earlier this month, according to media reports.
Tencent, Hong Kong's most valuable company by market capitalization, climbed 2.8% to HK$330.80 as it contributed more than a fourth of the Hang Seng Index's point gains on Monday. The advance followed a South China Morning Post report late Friday that the internet-services major had entered a pact with San Francisco-based digital publisher Tapas Media to launch a number of its popular Chinese comics in English. Among other index heavyweights, London-based lender HSBC Holdings gained 1.3% and insurer AIA Group rose 1.3%.
The day's gains were also supported by upbeat regional markets, with Tokyo's Nikkei 225 Average increasing 1.4%, while the Nikkei Asia300 Index of regional stocks outside Japan advanced 0.8%. Still, some participants sounded caution over local equity valuations and external uncertainties, including the possibility that tensions over North Korea may resurface.
"The Hong Kong market will still focus on overseas risks, and the upside is limited in the short term," said Daniel So, a strategist at CMB International, adding that the Hang Seng Index will likely stay in a range of 27,000 to 28,000 in the near-term.
The Hang Seng Index has climbed 27% this year and is among the region's best performers this year.
The Hang Seng China Enterprises Index of mainland companies listed in the city gained 0.6%. Yuan-denominated A-shares traded in the mainland advanced, sending the Shanghai Composite Index 0.4% higher and the Shenzhen Composite up 0.8%.
The yuan traded onshore slid 0.7% to 6.5230 against the U.S. dollar, poised for its steepest decline in more than two years. The decline came after the People's Bank of China eased the reserve requirements on trading in currency forwards following a solid rally in the yuan over the past several months.
"Having spent the past two years supporting the yuan with a range of measures, the PBOC is now unwinding this policy in response to the recent surge in the value of the currency," Rabobank analysts wrote in a report. "The news comes following a rebuild of China's foreign-exchange reserves and also on the back of concerns that the recent rise in the value of the yuan was distorting overseas trade."
Some Chinese property companies were among Monday's notable gainers in Hong Kong.
China Evergrande Group jumped 10% and was among the most active stocks, recovering more than the 2% loss it suffered last week. Country Garden Holdings advanced 1.8%, also in strong trading, after saying its contracted sales in August more than doubled from a year ago.
Trading in Wang On Group as well as its unit Wang On Properties was halted on Monday, pending the release of a joint announcement related to the disposal of a controlling interest in a subsidiary.
O Luxe Holdings jumped 7.9% to HK$1.77. The jewelry trader said on Monday its controlling shareholder, Prestige Rich, has agreed to sell more than 230 million shares in the company at HK$1. Prestige Rich will hold a 35.3% stake in the company following the sale, it said.
DeTai New Energy Group rose 4.2% after saying it has terminated talks to buy China Century Bio Energy Investment.
Hong Kong-listed Italian fashion house Prada tumbled by a record 14% after reporting an 18.4% drop in first-half net profit.
Cement equipment and engineering services provider China National Materials Company, or Sinoma, soared 13% after agreeing to be absorbed into state-owned China National Building Material. CNBM, which will issue 0.85 of its own shares in exchange for every Sinoma share as part of the deal, fell 2%.
BYD climbed 4.6% amid expectations that companies with a presence in electric and hybrid vehicles will get a boost, after state media reports said Chinese authorities were looking to eventually ban the production and sale of traditional fuel cars. Geely Automobile Holdings rose 0.3%, while BAIC Motor added 0.7%.
- By V. Phani Kumar; email@example.com; +852 3960 5102
- Edited By Suzannah Benjamin
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