Hong Kong stocks at three-month high, China's key index slips

Hong Kong stocks rose to a three-month closing high on Tuesday, after HSBC Holdings Plc's forecast-beating half-year earnings pushed investors back to riskier assets such as emerging markets equities. In Shanghai, China's key stock index ended 1.7 percent lower, easing off a 2-1/2 month high and weighed down by concerns over more fundraising.
Hong Kong's benchmark Hang Seng Index closed the session up 0.21 percent at 21,457.66, its strongest close since April 26. The China Enterprise Index of top locally listed mainland companies was down 0.5 percent at 12,120.83. The Asia ex-Japan iTraxx investment-grade index narrowed 6 basis points from Monday's close to 108 bps, a level last seen in May, suggesting that investors were putting their money in both Asian bonds and equities.
On the charts, most indicators point to the Hong Kong stock market as being due for a correction, with the Relative Strength Index passing the overbought level of 70 for the first time in over a year. The index has also broken past its upper Bollinger Band that is usually seen as a key resistance level, rising past the 21,495 level.
Galaxy Entertainment Group Ltd, which runs the Starworld casino complex in Macau, rose 3.5 percent to its highest close in more than two years after the Chinese territory said gambling revenue grew 70.4 percent in July from a year earlier. The Shanghai Composite Index ended at 2,627.002 points, reversing a 1.3 percent rise on Monday. The index has risen about 11 percent over the last month.
Medium-sized Chinese brokerage GF Securities said it planned to raise up to 18 billion yuan ($2.65 billion) in a private share placement to expand core businesses including underwriting share issues. China's biggest military supply provider, Jihua Group, set the price range for its Shanghai initial public offering to raise as much as 4.05 billion yuan ($597.9 million), while sources said China Everbright Bank hoped to sell shares in its IPO between 3 and 3.2 yuan each. Turnover in Shanghai A shares increased to 130 billion yuan ($19.2 billion) from 110 billion yuan on Monday, while losing shares outnumbered gainers 767 to 130.