23 August 2019

Stocks climb on news of preferred share go-ahead

Hong Kong stocks climbed higher Monday as the market celebrated news that Chinese regulators will allow certain companies to issue preferred shares.

The benchmark Hang Seng Index gained 1.91 percent to close at 21,846 points. The Hang Seng China Enterprises Index, the main gauge for H shares, gained 2.84 percent to 9,694.

The Shanghai Composite Index rose 0.91 percent to 2,066 points.     

On Friday, mainland media reported that the China Securities Regulatory Commission had given the nod to three types of companies, including constituents of the Shanghai Stock Exchange 50 Index, to issue preferred shares.

The market expected the financial sector to be among the first to benefit from the new funding channel. That translated to a rally by mainland-related banking stocks on Monday, which became the best performers for the day.

Other mainland lenders saw notable increases. China Merchants Bank (03968.HK) and China Construction Bank (00939.HK) were up more than 3 percent while Industrial & Commercial Bank of China (01398.HK) and Bank of China (03988.HK) gained 2.8 percent and 2.9 percent, respectively.

Investors piled into insurance funds, helping China Life Insurance (02628.HK), China Taiping Insurance (00966.HK), PICC Property & Casualty Co. (02328.HK) and China Pacific Insurance Group (02601.HK) gain anywhere from 2.9 percent to 4.9 percent.

PetroChina (00857.HK) surged 5.4 percent, the day’s best performing blue chip, after CLSA and Barclays issued optimistic reports on the oil behemoth.

Meanwhile, Hutchison Whampoa (00013.HK) tumbled 5 percent after UBS lowered its target price on the group. The bank said the sale price of a Watson stake to Singapore’s sovereign wealth fund Temasek missed expectations.

The stock came under heavy selling pressure as a result, making it the hardest hit among all Hang Seng constituents.

– Contact the writer at [email protected]



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