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Hong Kong: Shares follow mainland market higher on policy hopes
[HONG KONG] Hong Kong shares rose on Monday in step with strong gains in mainland markets on expectation that China will loosen policy to bolster its slowing economy, but analysts say the strenthening US dollar is having a negative effect on Hong Kong stocks.
Premier Li Keqiang said on Sunday that Beijing had plenty of scope to adjust policies in order to boost the world's second-largest economy, boosting mainland stocks by more than 2 per cent to their highest level in five and a half years.
Financial stocks led gains in Hong Kong's benchmark index, but the market's rise was curbed by worries that a stronger dollar will attract money away from the city's bourse.
"The reaction in Hong Kong to the premier's remarks is much more subdued, as the main theme here is the strengthening US dollar," said Chen Zhizhong, Shenzhen-based analyst at China Merchant Securities.
He added that if global investors allocate more money to the United States, that would put pressure on Hong Kong shares.
The Hang Seng index rose 0.5 per cent, to 23,949.55, while the China Enterprises Index gained 0.9 per cent, to 11,813.78 points.
Among the most actively traded stocks on Hong Kong's main board were China National Culture Group, up 30.6 per cent to HK$0.16; Global Tech, up 48.1 per cent to HK$0.11 and Universe International Holdings, up 36.1 per cent to HK$0.08.
Total trading volume of companies included in the HSI index was 1.2 billion shares.