Hong Kong shares rise on strong telecoms, China lifted by carmakers

Mon Jul 14, 2014 12:55am EDT

* HSI +0.4 pct, H-shares +0.4 pct, CSI300 +0.3 pct

* China's 3 largest carriers rise after deal on telecoms-tower firm

* Auto sector strong again as govt encourages 'green' cars

* Macau casinos weaker amid graft probe into a land deal (Updates to midday)

By Grace Li

HONG KONG, July 14 (Reuters) - Hong Kong shares rose on Monday with China's three state-owned wireless carriers leading gains, while mainland markets were also stronger as auto stocks extended their advance on new policy support.

At midday, the CSI300 of the leading Shanghai and Shenzhen A-share listings climbed 0.3 percent, while the Shanghai Composite Index was up 0.4 percent at 2,054.83 points.

The Hang Seng Index and the China Enterprises Index of the top Chinese listings in Hong Kong each added 0.4 percent. The benchmark index stood at 23,320.83 points, after earlier climbing above 23,450.

The Hong Kong benchmark has risen more than 7 percent since early May.

Jackson Wong, vice-president of Tanrich Securities in Hong Kong, said inflows of funds over the weekend cheered the market. "That's a pretty good sentiment booster right now," he said.

Analysts said one indication of hot money inflows is a series of currency market interventions by Hong Kong's central bank to defend the city's peg to the U.S. dollar.

On Friday alone, the Hong Kong Monetary Authority (HKMA) sold HK$10.540 billion (US$1.36 billion) as the local currency hit the strong end of its trading range.

On Monday, China Unicom climbed 3.4 percent, the top percentage gainer among Hang Seng components, while China Mobile and China Telecom moved up 2.2 and 2.8 percent, respectively.

The country's three largest telecoms said late on Friday they had agreed to jointly establish a telecommunications tower company with a registered capital of 10 billion yuan ($1.61 billion), which analysts said would cut their costs.

China Communications Services, a related equipment supplier, jumped 7.2 percent to a 2-1/2 month high.

The auto sector was strong again after posting solid gains on Friday helped by a tax exemption on green cars.

In a notice published on Sunday, China urged government officials to use more electric and plug-in hybrid cars as part of its drive to cut pollution. It aims to put 5 million such vehicles on the road by 2020.

SAIC Motor Corp rose 1.7 percent, following Friday's 1.6 percent, to its highest since Dec. 10. BYD gained 3.7 percent in Hong Kong, leading H-share gains.

Casinos were underperformers as a probe into a land deal relating to Wynn Macau by Macau's corruption agency hurt sentiment.

Beijing is due to release its second-quarter growth figure on Wednesday. The pace is expected to hold firm at 7.4 percent and anything less than that would likely unsettle markets.

Investors are also watching for June money supply and loan growth, due by Tuesday. Monthly urban investment, industrial output and retail sales figures are also expected on Wednesday.

($1 = 7.7499 Hong Kong Dollars)($1 = 6.2068 Chinese Yuan) (Editing by Richard Borsuk)

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