Insurers, FTZ shares push Chinese stocks up

Reuters Shanghai | Updated on March 12, 2018 Published on December 29, 2014

Chinese stocks rose on Monday led by insurance and property heavyweights, while companies connected with the Shanghai Free Trade Zone also leapt on plans for a major expansion of the zone unveiled last week.

The CSI300 index rose 0.8 per cent to 3,474.42 points at the end of the morning session, while the Shanghai Composite Index gained 0.9 per cent to 3,185.95 points.

Both indexes backed off from a previous rally that saw them gain more than 2 per cent before profit-taking began.

The CSI300 property sub-index jumped 4.2 per cent by midday.

All four listed insurance companies rose, with China’s biggest insurance firm China Life Insurance Co soaring by its 10 per cent daily limit.

Insurance companies, like other financial blue-chips, are expected to benefit from the stock market rally, and retail investors have been moving money around different categories of finance shares in recent weeks, causing sharp gains that can wear off quickly, analysts say.

China CSI300 stock index futures for January rose 0.9 per cent, to 3,528.8, 54.38 points above the current value of the underlying index. Other contracts also posted similar rises.

Hong Kong shares

Hong Kong shares rose steeply on Monday, pulled upward by the rally on the mainland and supported by gains in overseas markets, analysts said.

The Hang Seng index added 1.9 per cent to 23,790.20 points, while the Hong Kong China Enterprises Index gained 4.0 per cent to 12,021.04.

“The overall tone in Hong Kong has improved as we were lagging from other markets in the past month,’’ said Alex Wong, director at Ample Finance Group in Hong Kong.

Wong added that investors were paying more attention to the price discrepancy of A-H dual-listed stocks as the prices of Hong Kong listings are far cheaper than their mainland counterparts.

However, the index measuring price differences between dual-listed companies in Shanghai and Hong Kong stood at 125.39 by midday, its widest divergence since 2011.

Stock connect programme

A value above 100 indicates Shanghai shares are pricing at a premium to shares in the same company trading in Hong Kong, and vice versa, and many analysts expected the premium to be erased as the Shanghai-Hong Kong stock connect programme allowed capital to flow between the two markets.

Instead, cross border flows remained both tepid and unbalanced, with little money flowing south from Shanghai to Hong Kong, and the difference between valuations has increased dramatically as mainland markets have gone on a leverage-fuelled rally while Hong Kong markets have lagged.

Total volume of A shares traded in Shanghai was 31.66 billion shares, while Shenzhen volume was 12.44 billion shares.

Total trading volume of companies included in the HSI index was 1.2 billion shares.

Published on December 29, 2014
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