Chinese shares rise a second day amid stimulus bets

Hong Kong - Chinese shares traded in Hong Kong climbed for a second day, tracking advances by regional equities, amid optimism global policy makers will take steps to stimulate economic growth.

The Hang Seng China Enterprises Index rose 0.5% as of 07:17, while a jump in coal and casino stocks pushed the Hang Seng Index higher. China Shenhua Energy headed for its highest close in almost 11 months. Sands China gained the most in seven weeks after brokerage Telsey Advisory Group said in a note that Macau’s gross gaming revenue will grow in July for the first time in two years.

Global equities are almost back to where they were when the UK voted to leave the European Union, on prospects policy makers will act to stem any fallout for the global economy.

The Bank of England is projected to cut benchmark interest rates this week, while Japanese Prime Minister Shinzo Abe indicated he will order ministers to prepare plans for further stimulus. Japan’s Topix surged as much as 3.3% after the S&P 500 Index rose to a record overnight.

“Investors are expecting major central banks to continue easing,” said Ben Kwong, a director at brokerage KGI Asia. “Even if China’s economic growth isn’t satisfactory, the market is already expecting this and they can say there will be more room for easing. Investors continue to bargain hunt laggards like casino stocks.”

The Hang Seng China Enterprises Index climbed to 8 743.18, while the  Shanghai Composite Index rose 0.2% to 3 001.34. The Hang Seng Index gained 0.6%.

The Shenzhen Composite Index declined 0.4%, after weakening as much as 1.4%. Stocks in Shenzhen have under-performed those in Shanghai this month after speculation that Chinese authorities may announce the details of a long-planned exchange link with Hong Kong around July 1 failed to materialize.

China Coal Energy surged 5.9% in Shanghai after saying it expects to swing to a first-half profit from a net loss a year earlier.

Chinese economic data including reports on foreign direct investment, new loans and money supply are due as early as Tuesday, while trade figures expected Wednesday are forecast to show exports declined for a third straight month in US dollar terms. Reports on industrial output, retail sales and second-quarter growth are also due.

HK connect

Mainland investors have been purchasing Hong Kong shares through a trade link with Shanghai, using up about 80% of the total available quota, amid speculation the yuan will weaken and reduce the value of Chinese stocks. Bank of America, UBS, Goldman Sachs and the Royal Bank of Scotland last week reduced their outlooks for China’s currency, joining early bears such as Rabobank Groep.

“People are generally still very cautious," said Ronald Wan, chief executive at Partners Capital International in Hong Kong. “A lot of investors are reluctant to hold yuan assets. It has damped their willingness to buy A shares."

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