One day after seeing an end to the modest two-day winning streak in which it gathered nearly 250 points or 2 percent, the Hong Kong stock market surged back to the upside in Monday's trade. The Hang Seng Index stormed through several levels of resistance, finally settling above the 13,400-point level - and now analysts are predicting even further upside for the market at the opening of trade on Tuesday.
The Asian markets draw a sharply positive global forecast, with major gains expected from the financial sector that has been so oversold in recent months - thanks to details on the U.S. plan to remove toxic assets. Some better than expected economic data out of the U.S. adds to the positive sentiment. The European markets finished sharply higher, as did the U.S. markets, and the Asian bourses are forecast to follow that lead.
The Hang Seng finished sharply higher on Monday, driven by strength among the financials, telecoms, commodities and China-related shares.
For the day, the index soared 613.91 points or 4.78 percent to close at 13,447.42 after trading between 13,001.55 and 13,451.02 on turnover of 55.31 billion Hong Kong dollars.
The financials led the market to the upside as HSBC Holdings gained 0.60 percent, while Hang Seng Bank advanced 3.81 percent, Bank of East Asia advanced 5.78 percent, ICBC increased 6.18 percent, BOC Hong Kong was up 3.88 percent, Bank of China gained 2.64 percent, China Construction Bank surged 6.97 percent, Bank of Communications shot up 6.34 percent, China Merchants Bank gained 4.1 percent, Standard Chartered Bank was up 3.08 percent, Ping An Insurance rose 7.6 percent and China Life advanced 5.12 percent.
Also finishing higher, Aluminum Company of China (Chalco) surged 16.33 percent, while Petrochina gained 7.53 percent, CNOOC advanced 6.77 percent, China Merchant Holdings rose 11.40 percent, Espirit Holdings gained 6.09 percent, China Overseas advanced 3.09 percent, Hutchison Whampoa gained 3.91 percent, China Mobile advanced 4.91 percent, Sung Hung Kai Property added 7.09 percent, Cheung Kong jumped 8.16 percent, Henderson Land gained 8.78 percent, Sino Land rose 7.51 percent, Hang Lung Property rallied 6.76 percent and New World Development was up 6.91 percent.
The lead from Wall Street is broadly positive as stocks moved sharply higher over the course of the trading day on Monday, with the major averages more than offsetting the losses posted in the two previous sessions to reach their best levels in over a month. The standout gains came after the Obama administration revealed its plan to help banks sell toxic assets.
The plan unveiled by Treasury Secretary Timothy Geithner will set up an investment fund to buy mortgage-related securities and other assets that are hurting the balance sheets of banks. The new Public Private Investment Program would combine taxpayer money with private funds, aiming to buy loans and free up banks to renew lending.
Geithner's plan involves using up to $100 billion in funds from the $700 billion financial rescue plan passed in 2008 in addition to capital from private investors to generate an estimated $500 billion to purchase the toxic assets, a number that could double to $1 trillion over time.
In economic news, existing home sales unexpectedly rose in the month of February, according to a report released by the National Association of Realtors, with sales rebounding after hitting a twelve-year low in the previous month. The report showed that existing home sales rose 5.1 percent to a seasonally adjusted annual rate of 4.72 million units in February from a pace of 4.49 million units in January. Economists had expected sales to slip to a 4.45 million unit rate.
Some of the strength on the day also came as investors reacted to Canadian integrated oil and natural gas companies Suncor Energy (SU) and Petro-Canada (PCZ) jointly announcing that the companies have agreed to merge in an all-stock deal. Furthermore, Walgreen (WAG) reported second quarter earnings that fell year-over-year but still pleased investors. Comparable stores sales increased 1.3 percent in the quarter, while comparable store front-end sales decreased 1.2 percent.
The major averages accelerated to the upside going into the close, ending the session at or near their best levels of the day. The Dow closed up 497.48 points or 6.8 percent at 7,775.86, the Nasdaq closed up 98.50 points or 6.8 percent at 1,555.77 and the S&P 500 closed up 54.38 points or 7.1 percent at 822.92.
In economic news, Hong Kong recorded a balance of payments surplus of HK$ 147.3 billion in the fourth quarter, the government said on Monday, up from a surplus of HK$ 51.3 billion in the third quarter.
The current account surplus increased to HK$ 80.5 billion in the fourth quarter from HK$ 75.3 billion in the previous quarter. The deficit in the goods account decreased to HK$ 30.6 billion from HK$ 41.3 in the previous quarter. At the same time, the surplus in the services account increased to HK$ 99.7 billion from HK$ 98.6 billion.
Meanwhile, the surplus in the income account declined to HK$ 17.1 billion from HK$ 24.2 billion in the previous quarter. On the other hand, the deficit in the current transfers account narrowed to HK$ 5.7 billion from HK$ 6.2 billion in the third quarter.
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