Hong Kong shares lead Asian gains as official signals second stock trading link with China

HONG KONG – Hong Kong led gains in Asian stock markets Wednesday after an official said China will set up a second stock trading link with the city this year while Japan surged on a blockbuster share sale.

KEEPING SCORE: Hong Kong’s Hang Seng was up 2.3 per cent to 23,091.63 after earlier rising more than 3 per cent. Japan’s Nikkei 225 advanced 1.9 per cent to 19,038.88. The Shanghai Composite Index in mainland China added 2.6 per cent to 3,402.30. South Korea’s Kospi was little changed at 2,047.63. Australia’s S&P/ASX 200 gained 0.3 per cent to 5,241.00. Markets in Taiwan, India and Southeast Asia also rose.

STOCK CONNECT: People’s Bank of China Governor Zhou Xiaochuan said in an article on the central bank’s website that a stock trading link between Hong Kong and mainland China’s second smaller exchange in Shenzhen will be launched this year. The link has been widely anticipated by investors following last year’s opening of Shanghai-Hong Kong Stock Connect. That link gives outsiders wider access to the mainland’s main market through Hong Kong brokers while also allowing wealthy Chinese investors to invest in a market outside the mainland for the first time. Stock exchange operator Hong Kong Exchanges and Clearing Ltd. said there is no agreement yet on the proposed second link; its shares jumped nearly 9 per cent.

ANALYST VIEW: “Zhou Xiaochuan’s comments immediately would bring back investors’ confidence because now we know that China would continue financial reforms which were delayed by the stock crash in June,” said Jackson Wong, an associate director at Huarong International Securities. The link will give mainland Chinese investors, who have few options to invest abroad, “more ways to diversify their funds,” he said.

JAPAN JUMP: Shares of Japan Post jumped nearly 17 per cent in their first day of trading after the company and its banking and insurance units raised a combined 1.44 trillion yen ($11.9 billion) in the world’s biggest initial public offering of stock this year. The long awaited sale of shares in the state-owned company is the biggest since Chinese e-commerce giant Alibaba Group Holdings raised $25 billion in its IPO in September 2014. The Japan Post sale is meant to tease out some of the more than $14 trillion that Japanese have squirreled away in savings accounts

CHINA SERVICES: China shares gained after a survey found that the country’s service industries strengthened last month. The Caixin/Markit purchasing managers’ index for October rose to 52 from a 14-month low of 50.5 in September, based on a 100-point scale on which numbers below 50 indicate contraction. China’s service industries such as retailing and tourism have helped offset weakness in manufacturing amid a slowdown in the world’s No. 2 economy.

WALL STREET: Major U.S. benchmarks ended higher Tuesday as energy companies rallied. The Dow Jones industrial average rose 0.5 per cent to 17,918.15 and the Standard & Poor’s 500 rose 0.3 per cent to 2,109.79. The Nasdaq composite rose 0.4 per cent to 5,145.13.

ENERGY: Benchmark U.S. crude futures slipped 2 cents to $47.88 in electronic trading on the New York Mercantile Exchange. The contract added $1.76 to close at $47.90 a barrel in New York on Tuesday. Brent crude, which is a benchmark for international oils, dipped 4 cents to $50.50 a barrel in London.

CURRENCIES: The dollar rose to 121.22 yen from 121.11 in the previous day’s trading. The euro weakened to $1.0949 from $1.0961.