Hong Kong shares rose 0.7 percent on Monday, lifted by strength in Chinese financial and energy stocks as investors bet on further policy easing by Beijing after fresh data pointed to a quickly cooling economy. China's services sector grew in November at the slowest in three months, a survey showed on Monday, following data last week that indicated the mainland's factory activity shrank for the first time in almost three years.
The benchmark Hang Seng Index closed at 19,179.7 points, with banks and Chinese coal producers among the top gainers, while the Shanghai Composite Index closed down 1.2 percent at 2,333.2 points. "There's less pessimism now, but it still remains quite difficult. There were quite a few who were caught out by the magnitude of the spike up last Thursday, and they would be eager not to miss the next leg up," said Edward Huang, a strategist with Haitong International Securities in Hong Kong.
The mainland's top coal producer, China Shenhua Energy Co Ltd, rose 3.1 percent, while China Construction Bank (CCB) advanced 0.7 percent. CCB is currently trading at just 6.4 times its forward 12-month earnings, a 48 percent discount from its 10-year median, according to Thomson Reuters StarMine data. Gains of almost 19 percent this quarter to date have lifted its valuation from all-time lows after it lost 26 percent in a third quarter sell-off on escalating fears of a hard landing in China.
Want Want China Holdings Ltd and Tingyi (Cayman Islands) Holdings Holding Corp made contrasting debuts as Hang Seng Index components. Volume in both stocks were about twice their respective 30-day averages, but Want Want closed at an all-time high after gaining 3.1 percent, while Tingyi lost 1.8 percent. But turnover on the Hong Kong bourse slumped to its worst in five sessions, totalling only about half of last Thursday's, when shares surged after Beijing cut reserve requirements for its commercial banks for the first time in three years.
Shanghai's main benchmark index extended its underperformance relative to Asian peers after the latest economic data added to investors' scepticism about the economy. Turnover slumped to its lowest in a week, with industrials and material names - sectors seen more sensitive to economic growth - among the top drags on the Shanghai benchmark. Sany Heavy Industries Co Ltd lost 3.2 percent to sink to its lowest since October 2010, while Anhui Conch Cement slipped 2.4 percent.
But strength in financials helped limit losses on the day. Beijing's first cut in reserve requirements was perceived by segments of the market as intended to help commercial banks meet their annual lending quota. Industrial and Commercial Bank of China (ICBC), the mainland's biggest lender, gained 0.7 percent. It was the Shanghai benchmark's top boost, leading a slew of seven financial names among the top 10.