Hong Kong stocks rise on oil boost

Hong Kong - Hong Kong stocks headed for their longest winning run in a month as energy producers rallied amid optimism that higher oil prices will boost earnings.

The Hang Seng Index climbed 0.5% as of the mid-day break, extending a four-day advance to 2.6%. Oil-related companies dominated the market, with PetroChina reaching a four-month high and China Shenhua Energy headed for the strongest close since July last year. A measure of Chinese stocks traded in Hong Kong added 1%.

Oil futures rose to a three-month high in New York on Wednesday as data showing declining US crude stockpiles eased inventory overhang concerns.

Energy companies account for five of the seven biggest gainers on the Hang Seng Index this week, with PetroChina and Cnooc surging more than 7%. Mainland property companies are the largest losers, with China Resources Land tumbling 5% as more cities moved to cool property prices.

“The main driver is a rally in oil prices,” said Jingyi Pan, a Singapore-based strategist at IG Asia Pte. “The oil price increase outweighs concerns about a Fed hike at the moment.

For emerging markets, volatility will rise occasionally, as shown yesterday when we had some taper tantrum. For October, we may see sideways movements until early November when we have the US presidential election.”

Taper worry

Bloomberg News reported Tuesday that the European Central Bank is likely to gradually taper asset purchases, while senior Federal Reserve officials called for tighter monetary policy.

Strong US services data bolstered the case for a US interest-rate increase this year, with traders putting the odds of a December move at 62%.

The Hang Seng Index was last at 23 902.69. Trading volumes were near a three-month low with mainland Chinese markets shut for a week-long holiday. The Hang Seng China Enterprises Index rose for a fourth day. The Hang Seng Index tends to rise before US elections, Jefferies strategists led by Sean Darby wrote in a note on Thursday.

Anhui Conch Cement, China’s largest cement maker, extended a four-day rally. Short interest in the company climbed to 14.5% of its outstanding shares on Monday, the highest since February 2015 and five times the level seen seven months ago, according to latest data compiled by IHS Markit and Bloomberg.

Lenovo climbs

Lenovo jumped 2.5% after a Bloomberg report said that the company is in talks with Fujitsu to merge their personal-computer businesses. The Chinese manufacturer will take a majority stake in the venture, said a person with knowledge of the matter.

In the currency market, the offshore yuan traded in Hong Kong weakened beyond 6.7 per dollar for the first time since September 12. It was last trading 0.04% stronger for the day at 6.6963.

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