Shanghai’s “Nifty 50” index hits 23-month high; Hong Kong at 2-year peak

* SSEC -0.2 pct, CSI300 +0.1 pct, HSI +0.8 pct

* Banking stocks in demand

* China Merchants Bank at more than 9-yr high

SHANGHAI, July 12 (Reuters) – China stocks were mixed on
Wednesday morning, with bank shares powering the “Nifty 50”
blue-chips to a 23-month high, as investors sought firms with
solid fundamentals amid a continued correction in small-caps.

The CSI300 index rose 0.1 percent, to 3,674.84
points at the end of the morning session, while the Shanghai
Composite Index lost 0.2 percent, to 3,196.56 points.

An index tracking the 50 most representative blue-chips in
Shanghai, dubbed the “Nifty 50”, gained 1 percent to
its highest since August 2015, with heavyweight banking shares
far outperforming the broader market.

“The bull run in bank stocks is mainly due to improved
profitability in those lenders amid a weak recovery in the
economy,” said Sun Lijin, an analyst with Pacific Securities.

The lenders were also chased for their valuations and solid
fundamentals, Sun said, adding he expected them to continue to
outperform.

Small-caps extended losses into a third session, with the
tech-heavy start-up board ChiNext losing 0.8 percent
to a one-month low.

Analysts said the sluggishness was due in part to concerns
about mid-year earnings and expectations of more equities coming
onto Chinese markets.

Sector performance was mixed.

Banking and real estate shares led
the gains while healthcare plays fell.

China Merchants Bank, a leading retail bank,
rose 3.6 percent to a more than nine-year high. The stock has
gained nearly 42 percent this year.

Hong Kong stocks extended gains into the third day, helped
by strong advances in banking shares.

The Hang Seng index added 0.8 percent, to 26,089.42
points, its highest in two years.

The Hong Kong China Enterprises Index climbed 1.5
percent, to 10,575.66 points.

Shares of Industrial and Commercial Bank of China (ICBC)
rose 3.4 percent.

Sunac China’s shares touched a record high, on
news of the developer’s plan for a $9.3 billion deal to buy
Dalian Wanda’s tourism projects, but then ended the morning
flat.

(Reporting by Luoyan Liu and Andrew Galbraith; Editing by
Richard Borsuk)

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