HONG KONG, Sept 22 —Hong Kong stocks climbed for the fourth time in five days, led by financial and energy companies, as the Federal Reserve left borrowing costs unchanged and crude advanced in New York.
The Hang Seng Index rose 1.3 per cent at 10.06am local time. Bank of China Ltd. headed for its highest close in 11 months, while Cheung Kong Property Holdings Ltd. paced gains for developers. Hong Kong’s currency peg with the dollar means interest rates follow those in the US China Shenhua Energy Co. and PetroChina Co. jumped more than 2.5 per cent as oil gained following a plunge in US stockpiles. The Shanghai Composite Index added 0.5 per cent.
Hong Kong’s benchmark equity gauge has advanced 15 per cent this quarter, the best performance after shares in Ukraine and Kazakhstan, on bets global central banks will remain accommodative and as higher yields and lower valuations drew mainland investors to the city’s equities. While Fed officials still expect to raise interest rates this year, they scaled back the number of hikes they expect next year, to two from three, according to the median forecast of FOMC participants released after yesterday’s meeting.
“The rally on Hong Kong stocks still has a way to go as valuations and dividend yields are more attractive than mainland stocks,” said Wei Wei, an analyst at Huaxi Securities Co. in Shanghai. “What may halt the rally is when US really does raise rates this year and the market’s valuations get close to those of mainland stocks.”
Dual-listed equities are 18 per cent more expensive on the mainland than in Hong Kong, though that gap has narrowed as so-called H shares outperformed yuan-denominated A shares. The Hang Seng China AH Premium index now trades at its lowest level since December 2014. Hong Kong’s benchmark gauge offers a dividend yield of 3.4 per cent, compared with 1.9 per cent on the Shanghai Composite. — Bloomberg