Hong Kong: Chinese stocks rise to one-week high as banks gain

[HONG KONG] Chinese stocks rose to a one-week high in Hong Kong trading after minutes from a Federal Reserve meeting signaled that the pace of US rate increases will be gradual.

Hong Kong's Hang Seng China Enterprises Index advanced 1.2 per cent to 10,179.59 at 9.55 am Financial companies were among the best performers in the H-shares gauge with Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp. gaining at least 1.7 per cent. The Shanghai Composite Index climbed 0.3 per cent as technology companies resumed a year-long rally. The nation's cabinet was cited by the Xinhua News Agency as saying the government will support targeted industries to upgrade their technology.

Fed minutes spurred a rally for global equities after officials said "it may well become appropriate" to raise rates in December and largely agreeing that the pace of tightening would be gradual. Traders are pricing in a 66 per cent probability of a move - odds that shot up after a stronger- than-expected October jobs report on Nov 6. Strengthening US growth bolsters the outlook for Chinese exports, which have been faltering amid a slowdown in the second-biggest economy.

"It's a temporary break after the release of Fed minutes," said William Wong, head of sales trading at Shenwan Hongyuan Group Co in Hong Kong.

"The banking sector is leading the rally for now. But trading is going to be slow in the next month as we see more and more clients exiting the stock market." Foreign investors have recently been offloading mainland stocks through the Hong Kong-Shanghai stocks link, which recorded 21 straight sessions of net sales until Wednesday. The stocks connect celebrated its one-year anniversary this week.

A gauge of technology stocks in the CSI 300 rose 2 per cent, adding to a 49 per cent rally in 2015 that has made it the best performer among 10 industry groups. Goertek, a supplier to Apple, surged 8.2 per cent. Leshi Internet Information & Technology Corp, the biggest mainland-listed Internet video provider, advanced 4.2 per cent.

For all the discouragement about the slowdown in China's economy, at least one part of it is producing notable returns for some investors in US exchange-traded funds: technology.

Fund managers including Brendan Ahern, whose KraneShares CSI China Internet ETF holds US-traded stocks from online retailer Alibaba Group Holding Ltd. to Web portal Tencent Holdings, have keyed in on President Xi Jinping's vision of a country dominated by high-value technology companies and less reliant on traditional industries such as manufacturing and construction.

China will guide private investment into industries such as light manufacturing, textiles, steel and construction materials, Xinhua reported Wednesday, citing a statement released after a meeting chaired by Premier Li Keqiang.

The CSI 300 Index advanced 0.5 per cent, while the Hang Seng Index increased 1.5 per cent in Hong Kong.

BLOOMBERG