* HSI +1.7 pct, H-shares +1.7 pct, CSI300 +2.1 pct
* China's nickel firms jump after futures index surges
* Speculation of stamp duty changes spur HK developers
* Tencent up 4.7 pct, set for best day in a month
By Grace Li
HONG KONG, May 12 China's pledge to push ahead
with a broad range of capital market reforms and a surging
commodities sector sent the CSI300 index to its
highest in more than a month by midday on Monday.
China's State Council said late last week it would develop a
system for direct bond issuance by local governments, streamline
the approval process for initial public offerings (IPOs), and
remove some restrictions on the use of financial derivatives.
New rules were also issued separately by the Securities
Association of China governing IPOs.
Further steps in China's market liberalisation boosted
sentiment although not all were convinced the rally could be
"The new policy announcement may have strengthened investor
confidence, and Shanghai's main board tends to benefit more from
it," said Cao Xuefeng, head of research at Huaxi Securities in
The CSI300 of the leading Shanghai and Shenzhen
A-share listings jumped 2.1 percent by midday, heading for its
best day since April 8. The Shanghai Composite Index was
up 1.9 percent at 2,049.43 points, its best level since April
Several analysts said the reform measures would likely not
trigger sharper rises as these were long-term plans and would
take time to implement.
"Beijing's capital market reform is quite a long term policy
but investors took it as an excuse to cover their short position
in particularly ahead of some Q1 earnings like Tencent," said
Steven Leung, a director at UOB Kay Hian.
Du Changchun, an analyst at Northeastern Securities in
Shanghai, agreed adding that he expected the index to hover
between 2,000 to 2,100 points in the near term.
By midday, the Hang Seng Index rose 1.7 percent to
its highest since May 5, while the China Enterprises Index
of the top Chinese listings in Hong Kong gained 1.7
percent. If gains persist, this would be their best since March
In China, a total of 13 coal shares jumped to their 10
percent daily limit, including Beijing Haohua Energy Resource Co
, Yang Quan Coal Industry (Group) Co and
Shanxi Coal Industry Company Limited.
Nickel companies also rose sharply after the nickel futures
index jumped to its highest since Feb 2012 on supply concerns.
Investors and consumers are buying the metal on
prospects of a worsening supply shortfall later in the year.
Jilin Ji En Nickel Industry Co and Chengdu
Unionfriend Network Co leapt by their 10 percent
In Hong Kong, analysts said investors remained cautious
about the Chinese economy despite a firmer tone in the mainland
and said the gains may be short-lived.
"(Hong Kong) investors are now lacking direction. They are
just taking cues from the A-share market," said Ben Kwong, head
of research at KGI Asia. "If you jump into the market now, it's
very unlikely to see a sustainable upward trend. It's still an
Leading the gains in Hong Kong were technology, financial
firms and property. Tencent Holdings Ltd jumped 4.7
percent, set for its best day in a month, while Citic Securities
rose 5.5 percent to a two-week high.
Shares of property developers surged amid speculation the
government may change the city's stamp duty rules, with the real
estate sub-sector index jumping more than 3.5 percent.
(Additional reporting by Yimou Lee in Hong Kong and Chen Yixin
in Shanghai; Editing by Jacqueline Wong)