The Hong Kong stock market on Thursday posted its biggest single-day gain in four months, collecting more than 1,000 points in the process. The Hang Seng Index crashed through resistance at 14,500 points, and now analysts predict that the market will open higher again on Friday, following the rest of the region to the upside.
The global forecast for the Asian markets continues to be strong, although some profit taking may set in as several bourses already have seen major gains this week. The G-20 economic summit in London has generated considerable positive momentum, fueling optimism that the global economy may finally be starting to recover. The European markets finished sharply higher, as did the U.S. markets - and the Asian bourses are predicted to follow suit.
The Hang Seng finished sharply higher on Thursday, with just about all of the sectors finishing with significant gains - although the financial stocks, commodities and the property issues were especially strong.
For the day, the index soared 1,002.43 points or 7.41 percent to close at 14,521.97 after trading between 14,533.34 and 13,953.56 on turnover of 75.22 billion Hong Kong dollars.
Among the gainers, HSBC Holdings gained 15.29 percent, while Bank of Communications advanced 7.63 percent, Bank of East Asia surged 8.51 percent, Ping An Insurance gained 9.20 percent, China Life advanced 5.88 percent, Aluminum Corp. of China (Chalco) rose 9.51 percent, CNOOC gained 4.57 percent, PetroChina advanced 5.56 percent, China Overseas soared 10.58 percent, China Mercantile Holdings advanced 6.07 percent and China Resources edged up 0.68 percent.
The lead from Wall Street remains upbeat as stocks showed a strong upward move during trading on Thursday, as investors reacted well to mixed economic news and liked what they heard from the G-20 summit in London. The continued advance also reflected some optimism about stabilization in the economy.
Before the start of trading, the Labor Department said that initial jobless claims in the week ended March 28th unexpectedly rose to 669,000 from the previous week's revised figure of 657,000. With the increase, jobless claims rose to a new twenty-six year high.
Additionally, a report from the Commerce Department showing that factory orders rose 1.8 percent in February added to recent signs of stabilization in the economy, although the report also showed a notable downward revision to the data for January.
Meanwhile, traders were also keeping a close on the Group of 20 Summit in London, with the world leaders assembled at the meeting pledging to do whatever is necessary to end the economic crisis. President Barack Obama called the agreements reached by leaders a turning point in our pursuit of global economic recovery.
However, the president cautioned that while the reforms agreed to are necessary, they might not be sufficient. In order to ensure that a stable recovery takes hold, the G-20 will meet again in the fall, Obama announced. While noting that it is important that nations agree on an action plan, the president said individual actions remain just as important.
While the major averages gave back some ground going into the close, they still ended the session firmly positive. The Dow closed up 216.48 points or 2.8 percent at 7,978.08, the NASDAQ closed up 51.03 points or 3.3 percent at 1,602.63 and the S&P 500 closed up 23.30 points or 2.9 percent at 834.38. With the gains, the Dow and the S&P 500 ended the session at their best closing levels in nearly two months, while the tech-heavy Nasdaq set a nearly three-month closing high.
In economic news, Hong Kong's Census and Statistics Department said on Thursday that retail sales value dropped 12.6 percent to HK$ 19.9 billion in February, in contrast to the 7.4 percent rise seen in the previous month. Economists were looking for a decline of 2 percent. Meanwhile, the volume of retail sales dipped 13.8 percent annually in February, compared with a 5.4 percent increase in the preceding month. Economists expected retail sales to drop 3 percent.
For the January to February period, retail sales value declined 2 percent compared to the corresponding period of the previous year. During the period, retail sales volume decreased 3.6 percent.
In corporate news, Tongjitang Chinese Medicines Co. on Thursday acquired 100 percent of privately owned Anhui Jingfang Pharmaceutical Co. Ltd. for RMB 60.0 million in cash. Tongjitang has paid 90 percent of the consideration and will pay the remaining 10 percent near the end of April. Tongjitang Chinese Medicines Co. is a vertically integrated and profitable specialty pharmaceutical company focused on the development, manufacturing, marketing and selling of modernized traditional Chinese medicine in China.
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