HK, Shanghai shares close at highs on strong liquidity

By @ibtimes on

Hong Kong stockspacked on more gains on Wednesday to close up 1.95 percent at a14-month closing high, driven by liquidity inflows frominvestments exiting the U.S. dollar, which touched a 14-monthlow. 

China's key stock index rose 1.17 percent to a four-weekclosing high on Wednesday, led by property shares on the back ofstrong earnings while upbeat trade data boosted sentiment. Commodity and export-related stocks soaked up most of thefunds in Hong Kong. 

The market largely ignored concerns over a possible propertybubble as Chief Executive Donald Tsang said the government wasready to avert such a situation. The property sub-index endedwith a 1.58 percent gain.The benchmark Hang Seng Index .HSI rose 419.12 points tofinish at 21,886.48, its highest level since Aug 7, 2008.

Turnover increased to HK$64.6 billion ($8.3 billion) fromTuesday's HK$60.4 billion. The China Enterprises Index .HSCE of top Hong Kong-listedmainland companies gained 2.16 percent to 12,777.74.

The market is likely to go even higher in the near term,said Patrick Yiu, associate director at Cash Asset Management.The momentum is still quite strong.The HSI may test the 22,000level tomorrow, Yiu added. U.S. DOLLAR AT 14-MTH LOW At 0825 GMT, the U.S. dollar index was down 0.5 percent at75.611 against a basket of major currencies, near a 14-month low. 

Powerlong Real Estate Holdings (1238.HK) rallied more than 14percent before giving up most of its gains to end 1.8 percenthigher at HK$2.80 on its debut, against an IPO price of HK$2.75. PetroChina (0857.HK) gained 5.17 percent to HK$9.96, whileCNOOC (0883.HK) gained 3.48 percent to HK$11.90 after U.S. crudefutures rose for a fifth day towards their 2009 high of $75 perbarrel, helped by the weak dollar.  

China Resources (0291.HK) advanced 3.6 percent as commodityand export-oriented stocks benefitted from the U.S. dollar'sweakness and record gold prices. Tencent (0700.HK), China's largest instant messaging platformoperator, jumped 6.16 percent. The stock has been upgraded tobuy from hold by Citi because of expected growth in itsresilient client base and defensive nature. 

 SHANGHAI RESISTANCE BREACHED The Shanghai Composite Index .SSEC ended up 34.341 pointsat 2,970.532 after rising as high as 3,010.611, breaching thepsychologically important 3,000-point level for the first time innearly a month. Gaining Shanghai A shares outnumbered losing shares by 655 to205, while turnover rose to a three-week high of 141 billion yuan($20.66 billion) from Tuesday's thin 88 billion yuan.

 Upbeat trade data pointed to a better picture for theeconomic recovery, while firmer earnings in the third quarter areboosting investor confidence, said Chen Jinren, senior analystat Huatai Securities in Nanjing. China's exports fell 15.2 percent in September from a yearearlier, while imports fell 3.5 percent, Xinhua news agency saidon Wednesday. The declines were much less than expected.

The index has moved into an uptrend despite heavy new sharesupplies, but it may consolidate for a couple of days aroundstiff resistance at 3,000, Chen said. 

A steady stream of IPOs and other new share supplies havedamped sentiment, sending the index down 6 percent in the thirdquarter in its worst quarterly performance this year. 3,000 points offers stiff resistance and investors arecautious given the prospects for more share supplies, said CaoXuefeng, senior analyst at Western Securities in Chengdu. 

In the property sector, China State Construction andEngineering (601668.SS), the most actively traded share inShanghai, jumped by its 10 percent daily limit to 5.25 yuan aftersaying its sales rose 81 percent to 37 billion yuan in the firstnine months of the year. Gemdale (600383.SS) climbed 5.77 percent to 14.67 yuan aftersaying its sales reached 15 billion yuan in the first nine monthsof the year, up 91 percent from the same period last year. 

Travel shares were firmer on brisk business over China'sweek-long National Day holiday last week and speculation that China International Travel Service would make a strong marketdebut. China International Travel said on Wednesday it would list onin Shanghai on Thursday after raising 2.6 billion yuan ($381million) in an initial public offering last month  China United Travel (600358.SS) climbed 7.68 percent to 5.47yuan. 

CITIC Securities said in a recent research note that themarket could gain strength in the fourth quarter, as earnings atlisted companies are expected to improve in the fourth quarterand next year's first quarter. An export recovery and acceleratedproperty sector investment could also fuel stock market gains.

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