Hong Kong shares started the Year of the Dragon stronger on Thursday, lifted by fresh buying in financial and commodities-related stocks and outperforming Asian peers on pent-up demand after a three-day Lunar New Year holiday.
The Hang Seng Index stretched a winning streak into a fifth day, rising 1.6 percent, while the China Enterprises Index of the top mainland listings in Hong Kong were relative outperformers, gaining 2.4 percent.
Turnover on the Hong Kong bourse was, however, at the lowest in five sessions, with mainland markets shut for the week and only resuming trade on Monday.
The MSCI index of Asian stocks excluding Japan rose to a three-month high in intraday trading on expectation of more inflows into the region after the U.S. Federal Reserve said it is ready to support the economy with additional stimulus.
There looks to be some fresh buying into commodities-related stocks, but it isn't quite risk on, said Jackson Wong, vice-president for equity sales at Tanrich Securities, suggesting that investors are still cautious.
Commodities are seen as a hedge against any weakness in (the dollar), especially after Bernanke's statement last night, Wong added.
Jiangxi Copper rose 4.5 percent. Zijin Mining Co Ltd, China's largest goldminer, jumped 5.6 percent in twice its 30-day average volume, tracking gold prices that hit the highest in more than a month.
The Hang Seng, which ended at 20,439.14 will face resistance between 20,975-21,017, the highs reached in September and August last year respectively. The 21,017 level is also the bottom of a gap that opened up between Aug. 4 and 5.
Chinese banks may get a boost from manufacturing surveys on the mainland economy for January due to be released next week, which may point to sluggish activity, strengthening expectations for monetary policy easing.
The biggest Chinese banks were the top boosts on the Hang Seng Index on Thursday. Industrial and Commercial Bank of China (ICBC) gained 3.2 percent, while China Construction Bank (CCB) gained 2 percent.
SPORTWEAR MAKER LI NING SOARS
Li Ning Co Ltd surged 11.7 percent in almost eight times its 30-day average volume, extending strong gains after U.S. private equity fund TPG Capital and Singapore sovereign fund Government of Singapore Investment Corp Pte Ltd announced on Friday that they would invest about $115 million through convertible bonds.
This is seen giving much needed capital to a company whose stock fell more than 60 percent last year.
Li Ning is trading at a 43.7 percent discount to its historical forward 12-month earnings and a 74 percent discount from its historical forward price-to-book multiple, according to Thomson Reuters StarMine.
Margin squeeze has been worse than expected, but in any case, the market was anticipating that 2011 would be a year of restructuring, CCB International analysts said in a report last Friday.
They reiterated their neutral rating on the Chinese sportwear maker despite expecting TPG to bring about positive changes to its long term operations and corporate governance.