Hong Kong Stocks Rise On Earnings, Shanghai Trading Hopes

MarketWatch Pulse

Hong Kong stocks powered to respectable gains early Friday, helped by some good earnings news, a positive lead from the U.S. and reports that tests were planned this weekend for the direct trading of Shanghai shares. The Hang Seng Index rose 1% in initial trades, with the H-share index up 1.2% despite a milder advance over on the Chinese mainland, where the Shanghai Composite Index added 0.4%. Bank shares were mostly higher after Bank of China Ltd. and Agricultural Bank of China Ltd. reported earnings. Both lenders posted profit gains in the mid-single-digits, both missed Wall Street Journal consensus forecasts, and both saw their nonperforming loans grow, but the market reaction was divergent, with AgBank up just 0.3%, while Bank of China rose 1%. Overall, financials were mostly higher, with China Merchants Bank Co. up 1.7%, and Bank of Communications Co. rising 1.4%, but Standard Chartered PLC dropped 4.3%, adding to losses a day before as reports said the U.S. may launch another probe into violations of U.S. sanctions against Iran. Helping support the sector was a stream of news reports, beginning late in the Thursday trading session, that the Hong Kong and Shanghai bourses were set to resume testing of a much-awaited scheme to trade each other's shares. The so-called China stock "through train" is hoped to boost the fortunes of both markets. Meanwhile, back on the earnings front, China Cosco Holdings Co. jumped 3%, and fellow shipper China Shipping Container Lines Co. gained 0.9%, after both swung to third-quarter profits, helped in no small part by government subsidies. And China Resources Power Holdings Co. rallied 4.3% on the strength of its earnings. Among other gainers on the Hang Seng Index: Hengan International Group Co. rose 2.5%, China Mengniu Dairy Co. climbed 2.2%, and Sands China Ltd. and China Overseas Land & Investment Ltd. traded 2% higher each.

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