HONG KONG: China and Hong Kong stocks rose on Monday, as banks and energy shares climbed on hopes that a rebound in the country’s services consumption would benefit the sectors.
China’s blue-chip CSI300 index added 1.14%, while the Shanghai Composite Index gained 1.81%. During early trade, it briefly rose above the 3,400 level — the highest in 10 months and biggest one-day percentage gain in over two months.
Hong Kong benchmark Hang Seng Index was up 1.24%, and the Hang Seng China Enterprises Index rose 1.47%.
“Chinese banks and insurance stocks bolstered the Shanghai blue-chip index, as investors are pinning on hopes that China’s consumption recovery would benefit banks’ profit this year,” said Kenny Ng, a strategist at China Everbright Securities International.
Shanghai-listed state-owned banks such as Industrial and Commercial Bank of China and Agricultural Bank of China were up 6.21% and 7.46%, respectively.
The strong performance came after mid-sized lenders China Bohai Bank, China Zheshang Bank and Hengfeng Bank on Friday reduced interest rates on some deposits by 10 basis points (bps) and 30 bps, following smaller peers.
State-owned financial stocks account for 15%-20% of the Shanghai Composite and CSI300 index weighting and nearly half of A-share earnings, according to a Bank of America report published last week.
Household consumption per capita rose 5.4% in Q1, compared with a year earlier, up from 2.4% year-on-year increase in Q4, according to a Goldman Sachs report. The increase was led by a strong services consumption rebound.
In Hong Kong, HSBC shares rose 1.8%, the highest in two months. Last Friday, it defeated a proposal backed by its biggest Asian shareholder Ping An to break up the bank and spin out its lucrative Asian business at its annual investor meeting in Birmingham in England.
Insurer AIA also contributed to the Hang Seng’s gain, up 3%.
The Hang Seng Mainland Oil & Gas Index rose 4.98%. China Petroleum & Chemical Corp surged 5.91%, a four-year high.
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