Hong Kong stocks hit 20-month high on mainland China demand

SHANGHAI: Hong Kong stocks climbed to a 20-month high on Tuesday, helped by steady and robust demand from investors in mainland China for shares in the Asian financial hub.

** The Hang Seng index added 3.1%, to 29,746.17 points, highest since May 3, 2019, while the Hong Kong China Enterprises Index gained 2.9%, to 11,796.28.

** Leading the gains, the Hang Seng tech index jumped 4% to a fresh high, while the Hang Seng financials index rose 2.9%.

** "It's mainly because of the liquidity foam. The outperforming stocks are benefiting from southbound flows," said Steven Leung, a Hong Kong-based executive director at UOB Kay Hian.

** He said the AH premium also makes Hong Kong equities attractive to mainland investors.

** As of 04:14 GMT, China's A-shares were trading at a premium of 34.69% over the Hong Kong-listed H-shares.

** Mainland investors purchased 18.9 billion yuan ($2.91 billion) worth of Hong Kong stocks on Tuesday via the Stock Connect linking mainland and Hong Kong, after spending a record HK$23 billion on Monday, according to HKEX and Refinitiv data.

** For the past two years, the Hong Kong stock market had been far underperforming the A-share market and US stocks, and the southbound inflows now are expected to help a recovery in the valuations of Hong Kong stocks, Essence International noted.

** The brokerage expects easing Sino-US tensions after President-elect Joe Biden takes office, noting he would mainly focus on combating the coronavirus outbreak in the United States and soothing domestic divisions.

** On the mainland, the CSI300 index fell 0.4%, to 5,496.97 points at the end of the morning session, while the Shanghai Composite Index was unchanged at 3,596.10 points.