October 12, 2017 8:16 pm JST

Chinese stocks in Hong Kong reach 26-month high

New China Life leads gains by insurers; developers rise after previous day's drop

HONG KONG (Nikkei Markets) -- Hong Kong stocks advanced on Thursday, with gains by insurance companies helping an index of Chinese companies listed in the city reach a 26-month high.

The Hang Seng China Enterprises Index of large mainland companies climbed 0.8% to 11,500.34. The top five gainers on the 40-stock gauge were all insurers, with New China Life Insurance jumping 6.3% and China Pacific Insurance Group gaining 3.5%. Both stocks have underperformed the gauge, known as the H-share index, over the past month.

"Chinese insurers have been quiet for almost two weeks and they are rising probably because money is rotating into the laggards," said Michael Wong, director at brokerage firm CSL Securities. He added that the advances may be partly because of a "valuation boost" to insurers in the wake of ZhongAn Online P&C Insurance's initial public offering last month.

ZhongAn, an online insurer which counts Tencent Holdings and Ping An Insurance Group among its major shareholders, rose 2.5% to HK$88.75 on Thursday, compared with its initial public offering price of HK$59.70. Tencent, the most valuable company listed in Hong Kong, dipped 0.4% on Thursday.

The Hang Seng Index rose 0.2% to 28,459.03, helped by a rebound for local developers. New World Development gained 2.4% and Sun Hung Kai Properties rose 1.9%. Property companies had declined on Wednesday after Hong Kong Chief Executive Carrie Lam unveiled a proposal to make housing more affordable to middle-class families and said a task force would examine options to boost land supply.

Paul Pong, managing director at Pegasus Fund Managers, said developers were unlikely to face "continuous selling pressure," as home prices were supported by good demand.

Neither interest-rates nor land supply was likely to rise fast enough to have a large impact on developers, said Kevin Leung, director for investment strategy at Haitong Securities International.

The U.S. Federal Reserve is widely expected to raise its policy interest rates in December. Borrowing costs in Hong Kong move in tandem with the U.S. because of the local currency's peg to the U.S. dollar.

Brilliance China Automotive Holdings rose 1.2% to HK$21.50, halting a three-day losing streak. Goldman Sachs raised the automaker's rating to buy from neutral in a note dated Wednesday, with a 12-month price target of HK$28.80. Shares of the company, which has a joint venture with BMW, fell on Wednesday amid news reports the German automaker was considering a separate venture with Great Wall Motor. Trading in Great Wall Motor was suspended on Thursday, pending an announcement.

Sunny Optical Technology Group dropped 4.6% and was among the day's most actively traded stocks in Hong Kong after reporting a 16.7% decline in mobile camera module sales for September from the preceding month. The stock has more than tripled so far this year.

In mainland trading, the Shanghai Composite Index slipped 0.1% and the yuan was little changed at 6.5860 to the dollar. The Nikkei Asia300 Index of regional stocks outside Japan gained 0.7%.

-- Amy Lam and Carrie Chen

Asia300

Tencent Holdings Ltd.

China

Market(Ticker): HKG(700)
Sector:
Industry:
Technology Services
Internet Software/Services
Market cap(USD): 482,964.40M
Shares: 9,498.99M
Asia300

Ping An Insurance (Group) Co. of China Ltd.

China

Market(Ticker): HKG(2318)
Sector:
Industry:
Finance
Multi-Line Insurance
Market cap(USD): 191,850.53M
Shares: 18,280.24M
Asia300

New World Development Co. Ltd.

Hong Kong

Market(Ticker): HKG(17)
Sector:
Industry:
Finance
Real Estate Development
Market cap(USD): 14,356.34M
Shares: 9,838.08M
Asia300

Sun Hung Kai Properties Ltd.

Hong Kong

Market(Ticker): HKG(16)
Sector:
Industry:
Finance
Real Estate Development
Market cap(USD): 47,276.95M
Shares: 2,896.74M
Asia300

Great Wall Motor Co., Ltd.

China

Market(Ticker): HKG(2333)
Sector:
Industry:
Consumer Durables
Motor Vehicles
Market cap(USD): 14,513.36M
Shares: 9,127.26M

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