Hong Kong shares rose for the fifth-straight session on Thursday, gaining 3.3 percent on strength in mainland stocks after a eurozone deal on tackling the region's debt debacle removed a cloud hanging over global markets. Turnover was the highest in more than a month, though the level was smaller than on days of steep losses in August, during the first of two selloffs that made last quarter the worst for the Hang Seng Index in a decade.
"The cyclical sectors have been way, way oversold. I'm still hearing a lot of doubts from clients, so a lot of people have not jumped back in this rally," said Hong Hao, a global equity strategist with CICC in Beijing. Hong said the rally could continue in the short term, as more investors get back into the market with the eurozone debt deal a good catalyst. But he said the market remained in a bearish trend, with global growth expected to slow in the next few quarters.
The China Enterprise Index surged 5.1 percent on Thursday, helping the broader Hang Seng Index finish at 19,688.7 points and almost recovering its losses from the September selloff. Near-term resistance is seen at about 19,803 for the Hang Seng, which supported the benchmark over three sessions in mid-September. It is the top end of a bigger gap that formed between September 9 and 12, which heralded the start of the selloff. Railway-related stocks outperformed, extending their recent recovery, with China Railway Group Ltd surging 17.5 percent and China Railway Construction Corp Ltd up 12.2 percent in volume almost five times its 30-day average.
The sector has been steadily regaining its footing since mid-October after a series of policy measures aimed at injecting liquidity and reactivating investment in an industry dogged by accidents and even a sagging property sector, whose fortunes are key to the continued expansion of rail lines. On Thursday, China Resources Land and China Overseas Land & Investment , which lost 39 and 32 percent last quarter respectively, had the day's two highest percentage gains on the Hang Seng Index. They gained 13.7 and 11.9 percent.
The Shanghai Composite Index ended up 0.3 percent at 2,435.6 as investors took profit on materials names that outperformed this week, limiting third-quarter earnings-driven gains in financials.