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Hong Kong stocks rose to the highest level in over a decade on Tuesday, aided by a surge in property shares as well as China's H-Share full convertibility reform which is generally viewed as positive to Hong Kong-listed Chinese companies. China stocks also started 2018 trading on a bullish note on better-than-expected December manufacturing activity.
China's securities regulator had said on Friday it would launch a pilot scheme that allows mainland-incorporated companies listed in Hong Kong to convert their non-tradable equity into free-floating shares. Analysts said the move would help improve corporate governance of H-share companies in the long run.
Sentiment is also buoyed by a private business survey showing growth in China's manufacturing sector unexpectedly picked up to a four-month high in December as factories cranked up production to meet a surge in new orders.
At 04:17 GMT, Chinese H-shares listed in Hong Kong rose 2.79 per cent to 12,035.56, while the Hang Seng Index was up 1.68 per cent at 30,421.26. The Shanghai Composite index was up 35.81 points or 1.08 per cent at 3,342.98.
China's blue-chip CSI300 index was up 1.22 per cent, with its financial sector sub-index higher by 2.09 per cent, the consumer staples sector down 0.23 per cent , the real estate index up 3.76 per cent and healthcare sub-index up 0.08 per cent. The smaller Shenzhen index was up 0.7 per cent and the start-up board ChiNext Composite index was higher by 0.53 per cent.
Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.80 per cent, while Japan's Nikkei index was down 0.08 per cent. The yuan was quoted at 6.5012 per US dollar, 0.09 per cent firmer than the previous close of 6.5069.
The largest percentage gainers in the main Shanghai Composite index were Shandong Lubei Chemical Co Ltd up 10.03 per cent, followed by SJEC Corp gaining 10.01 per cent and Chengdu Xuguang Electronics Co Ltd up by 10 per cent. The largest percentage losses in the Shanghai index were China Southern Airlines Co Ltd down 5.37 per cent, followed by BOCO Inter-Telecom Co Ltd losing 5.03 per cent and Jiangsu Protruly Vision Technology Group Co Ltd down by 4.96 per cent.
The top gainers among H-shares were Great Wall Motor Co Ltd up 7.71 per cent, followed by China Vanke Co Ltd gaining 6.73 per cent and Haitong Securities Co Ltd up by 4.59 per cent. The three biggest H-shares percentage decliners were Air China Ltd which has fallen 0.95 per cent, Sinopharm Group Co Ltd which has lost 0.9 per cent and Huaneng Power International Inc down by 1.0 per cent.
About 11.64 billion shares have traded so far on the Shanghai exchange, roughly 76.8 per cent of the market's 30-day moving average of 15.16 billion shares a day. The volume traded was 0.00 as of the last full trading day.
As of 04:17 GMT, China's A-shares were trading at a premium of 29.35 per cent over the Hong Kong-listed H-shares. The Shanghai stock index is below its 50-day moving average and above its 200-day moving average. The price-to-earnings ratio of the Shanghai index was 14.87 as of the last full trading day while the dividend yield was 1.9 per cent.
In Hong Kong, the sub-index of the Hang Seng index tracking energy shares rose 2.6 per cent, while the IT sector rose 2.4 per cent. The top gainer on Hang Seng was Sunny Optical Technology Group Co Ltd up 8.21 per cent, while the biggest loser was Galaxy Entertainment Group Ltd which was down 3.75 per cent.
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