Hong Kong shares end at 19-month high, China plays lead
Hong Kong shares kicked off the new year by closing at a 19-month high on Wednesday, as investors cheered the passage of a bill in the United States Congress that averted a fiscal crisis and eased worry of a recession in the world's largest economy.
Investors chased gains in China growth-sensitive counters that were laggards in 2012 and thematic plays such as non-bank financials and property that are expected to outperform this year. Bourse turnover was at its highest since Dec. 18.
The Hang Seng Index climbed 2.9 percent to 23,312 points, its highest since June 2011 and decisively breaking above chart resistance at around 22,800 that has stymied gains for much of the previous two weeks.
The China Enterprises Index of the top Chinese listings jumped 4 percent in its best daily gain in a year, closing at its highest since August 2011.
Gains on Wednesday accelerated after the United States averted economic calamity when lawmakers approved a deal to prevent huge tax hikes and spending cuts that would have pushed the country into recession.
"In the short term, this may trigger some reversal of flows back to the U.S., but the effects of that will probably be offset by flows from Japan as the yen continues to weaken," said Hong Hao, chief equity strategist at Bank of Communications International Securities.
"There's also an element of catch up today as people begin to return from their holidays and realise they have missed out on the December rally in the China market," Hong added.
An 18 percent gain in December, its best monthly showing since July 2009, helped the CSI300 of the top Shanghai and Shenzhen listings to its first annual gain in three. Mainland markets were shut on Wednesday and will resume trade on Friday.
On Wednesday, Chinese steel producer Citic Pacific surged 11.4 percent to its highest since April 2012. It had finished 2012 down 17.4 percent and underperformed the Hang Seng Index's 23 percent jump.
Chinese sportswear brands Li Ning and Anta Sports , which fell 18.3 and 25.7 percent in 2012 respectively, each soared 11.9 and 8 percent on Wednesday.
The annual declines in 2012 were Citic Pacific's and Li Ning's third-straight annual loss, and the second year of loss for Anta Sports.
Aluminum Corporation of China (Chalco) jumped 6.2 percent to return to levels not seen since May 2012. It had finished 2012 up 5 percent, failing to retain much of its gains from early last year.
Metallurgical Corp of China Ltd gained 6.6 percent after the company said it would transfer its 51.06 percent equity interest in loss-making Huludao Nonferrous Group to its controlling shareholder.
CHINA THEMATIC PLAYS STRONG
Chinese financials were strong after China's official manufacturing purchasing managers' index held steady in December at 50.6, matching November's seven-month high, that pointed to steadying growth recovery in the world's second-largest economy.
But non-banking financial counters outperformed, with China Life Insurance rising 6.7 percent, extending strong 2012 gains on hopes that financial sector reforms in the mainland will benefit insurers and brokerages.
New China Life Insurance spiked 12.6 percent in its best daily gain since it made its Hong Kong listing debut in December 2011.
The mainland's securities regulator had said over the weekend that it plans to allow eligible securities houses and insurers' asset management units to develop and manage mutual funds in a bid to reinvigorate an industry struggling to produce returns for investors.
This follows an announcement last week allowing brokerages to sell subordinated debt and the Chinese central bank pledging to quicken the pace of reform in the financial sector that sent shares of Chinese brokerages soaring last Friday.
Citic Securities, China's largest listed brokerage, jumped 6.1 percent to close at a record high after posting a 53 percent gain in 2012.
Financial sector reforms in China are expected to stay a dominant theme in 2013, analysts say, as would Chinese urbanisation-related counters such as property developers, which were also stronger on Wednesday.
But in a sign that such hopes may not extend sector-wide, Country Gardens ended up 2 percent, paring gains after its nine-month net profit showed the property developer posting a 34.4 percent rise in profit from a year earlier.
The Macau gaming sector extended gains after data showed monthly Macau gaming revenue hitting a record high in December. Sands China jumped 5.3 percent.