Late Rally Spurs Hong Kong Shares to Biggest Gain Since May 2016
(Bloomberg) -- Hong Kong’s benchmark equity index posted its biggest daily gain since May 2016, as shares in the city continued to recover some of last week’s losses.
The Hang Seng Index closed up 2.3 percent, with fresh impetus coming in the last half hour of trading as S&P 500 Index futures jumped ahead of U.S. inflation data. Financial shares led gains, helped by Goldman Sachs raising its price target on Hang Seng Bank Ltd., which surged the most since May 2009. Hong Kong-traded mainland companies also rose for a second day, led by China Construction Bank Corp. and Industrial & Commercial Bank of China Ltd.
In addition to the Goldman’s Hang Seng upgrade, banks were boosted by expectations that their net interest margins will widen this year as lending rates are likely to rise faster than deposit rates, said Castor Pang, head of research at Core-Pacific Yamaichi HK. Quicker-than-expected new loan growth will also help net interest income, he said.
Both the Hang Seng Index and H-share gauge are still down more than 7 percent this month, having felt the brunt of the selloff in global and mainland equities, especially last week. Wednesday was the first time since Jan. 23-24 that they’d risen for two days in a row. The gains accelerated as mainland markets came to a close for the week-long Chinese New Year holiday, which runs through Feb. 21. Hong Kong’s holiday is on Friday and Monday. The Shanghai Composite Index rose 0.5 percent for a three-day gain of 2.2 percent.
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