Hong Kong, Shanghai stocks jump on China rate cut
Hang Seng Index added 456.02 points to 23,893.14 on turnover of HK$105.25 billion.
HONG KONG, (AFP) - Hong Kong stocks rallied 1.95 percent Monday and Shanghai also jumped after China s central bank announced a surprise interest rate cut in an attempt to strengthen growth.
The Hang Seng Index added 456.02 points to 23,893.14 on turnover of HK$105.25 billion ($13.58 billion).
The People s Bank of China Friday slashed its one-year rate for deposits by 25 basis points to 2.75 percent, and its one-year lending rate by 40 basis points to 5.6 percent.
Friday s announcement -- of the first cut since July 2012 -- followed a series of weak figures indicating the world s number two economy, a key driver of global growth, is struggling.
HSBC last week said its index of manufacturing activity in China showed the sector had stagnated in November. That came after other data on trade and industrial output also highlighted weakness.
"The key is not the rate cut itself, but rather whether the rate cut could start bringing down the real interest rate," Credit Suisse said, according to Dow Jones Newswires.
"If this rate cut is not stopped here but followed by a couple of rounds of cuts... it would help boost the market."
In New York Friday the Dow climbed 0.51 percent and the S&P 500 gained 0.52 percent-- both ending at new record highs -- while the Nasdaq added 0.24 percent.
Among Hong Kong stocks Monday Cathay Pacific Airways rose 2.73 percent to HK$15.80, CNOOC surged 3.20 percent to HK$12.26 and Tencent added 1.05 percent to HK$25.50.
HSBC put on 0.78 percent to HK$77.10 and Tsingtao Brewery advanced 1.76 percent to HK$54.95.
The benchmark Shanghai Composite Index jumped 1.85 percent, or 46.09 points, to 2,532.88 on turnover of 330.3 billion yuan ($53.9 billion). The close was the highest since September 1, 2011.
The Shenzhen Composite Index, which tracks stocks on China s second exchange, gained 1.32 percent, or 17.96 points, to 1,377.79 on turnover of 244.7 billion yuan.
"The rate cut improved market sentiment and triggered gains in the overall market," Haitong Securities analyst Zhang Qi told AFP. "Sectors that are expected to get an immediate boost from the cut, like property, led the rises."
Property developers were the biggest gainers.
Poly Real Estate soared by its 10 percent daily limit to 6.47 yuan in Shanghai while Vanke shot up 8.32 percent to 10.15 yuan in Shenzhen.
Banks were mixed in Shanghai on worries the "asymmetric" rate cut -- lending rates decreased more than deposit rates -- will lead to weaker earnings.
Agricultural Bank of China slid 0.39 percent to 2.56 yuan but China Construction Bank rose 0.47 percent to 4.24 yuan. ICBC was unchanged at 3.73 yuan.
Other financial plays gained. China Merchants Securities surged 10 percent to 16.34 yuan while Ping An Insurance Group advanced 4.25 percent to 45.85 yuan
