Hong Kong stocks rallied across the board on Thursday, taking cues from Wall Street after a strong recovery on lower bond yields, with China plays climbing to a record high. Surging resource shares fuelled gains in Hong Kong-listed shares in mainland companies, or H shares, with Aluminium Corp of China rallying to a life high, stoked by a broker upgrade.
Underplayed mainland lenders also lent their weight to H shares' outperformance, led by Industrial & Commercial Bank of China and China Construction Bank. Blue chips advanced 1.4 percent with cellular operator China Mobile giving the biggest boost to their gains, while Hong Kong Exchanges and Clearing set a new high.
Investors sent H shares up 2.6 percent, brushing off weak mainland-listed equities, which were cautious on warnings from Chinese Premier Wen Jiabao that Beijing would tighten policy further to prevent the economy from overheating. H shares have been locked in consolidation over the past months and their sudden leap took investors by surprise.
"It's hard to say what the trigger was," said John Schofield, director at Tempus Investment who a day earlier predicted that H shares would break to the upside. H shares trade at about a 40 percent discount to the yuan-denominated A shares traded in mainland China.
The China Enterprises Index of mainland H shares crossed 11,200 for the first time to hit an all-time high of 11,217.57, topping a previous high set on May 15, a day after China announced it would let its banks invest their clients' money in overseas equities.
The index settled up 281.69 points at 11,180.92. The benchmark Hang Seng Index closed up 288.51 points at 20,867.26 on mainboard turnover of HK$69.8 billion (US $8.9 billion), up sharply from Wednesday's HK$55.2 billion. Total turnover, including volume on the growth enterprise market (GEM) neared HK$72 billion, the tenth largest this year.
China Mobile, the day's most active stock, ramped up 1.8 percent to HK$75.20. ICBC rose 3.7 percent to HK$4.18 and China Construction Bank surged 3.3 percent to HK$4.76. Aluminium Corp of China, also known as Chalco, surged further in heavy trade, a day after China's top alumina producer said it was planning talks with Baotou Aluminium, fuelling speculation of asset injections.
Goldman Sachs, in a report released on Thursday, upgraded Chalco's stock rating to buy from neutral, citing a "turning point" in aluminium fundamentals this year, including accelerating demand. The bank also nearly doubled its 12-month target price to HKK$15.50 from HK$8.35.
Chalco shares reached a life high at HK$12.34 before easing slightly to end the morning at HK$12.18 for a 10.7 percent gain. Higher crude prices gave investors a reason to buy energy stocks. CNOOC shot up 3.6 percent to HK$8.3 and Sinopec Corp raced up nearly 2 percent to HK$8.53.
Yanzhou Coal ramped up 6.7 percent to HK$11.40 and China Shenhua leapt percent to HK$25.70. China Coal finished up 6.5 percent at HK$11.54. Hong Kong Exchanges and Clearing Ltd, a barometer of market sentiment, climbed 3 percent to HK$93.30, having earlier set a new high at HK$94.15.