Financial and property shares propelled Shanghai stocks to their highest close in seven months on Monday, with trading volumes surging more than 70 per cent from the previous session.
The rise was largely fuelled by hopes the much-anticipated Shenzhen-Hong Kong Stock Connect scheme could be confirmed as early as this week.
The Shanghai Composite Index climbed 2.4 per cent or 74.53 points to 3,125.2, its best level since early January. The large-cap CSI300 gained 3 per cent or 99.19 points to 3,393.42. The Shenzhen Composite Index rose 2.5 per cent or 49.57 points to 2,023.24. The ChiNext Index, the Nasdaq-style startup board, jumped 3.3 per cent or 69.37 points to 2,193.21.
Combined turnover for the Shanghai and Shenzhen markets surged 76 per cent to 751 billion yuan against Friday’s 427 billion yuan.
In Hong Kong, a rally in financial stocks also lifted the benchmark Hang Seng Index, which rose 0.7 per cent or 165.6 points to 22,932.51, the highest settlement in nine months.
The Hang Seng China Enterprises Index, or H-shares index, booked its best finish since late December, up 1.6 per cent or 154.04 points to 9,708.89.
Turnover in Hong Kong hit HK$89 billion, up 13 per cent from Friday’s HK$79 billion.
The rallies in the mainland and Hong Kong markets came after the Hong Kong Economic Journal reported earlier in the day that the Shenzhen-Hong Kong Stock Connect could be announced as early as this week, with an official launch in December.
Last week, Hong Kong Exchanges Clearing said in its half-year results statement that it is “technically” prepared to launch the link, which is pending regulatory approval.
The scheme, first mentioned by Premier Li Keqiang in a public speech in January 2015, will allow individual investors from Hong Kong and Shenzhen to buy or sell stocks in the other’s market through brokers.
“The expectation of the [new Stock Connect] system has boosted market sentiment,” said Kingston Lin King-ham, a director for Hong Kong-based AMTD Securities.
“It may be easy for the Hang Seng Index to reach 23,000 this month.”
Separately, Wang Hanfeng, an analyst at China International Capital Corp, said he expected Hong Kong stocks to outperform A-shares after the Stock Connect announcement is made, as the Hang Seng Index has received an additional boost from improved liquidity conditions in global markets this year.
Of the top outperformers on Monday, brokerage firms advanced across the board. In the mainland, Huatai Securities soared 10 per cent by its daily increase limit, closing at 21.43 yuan. China Merchants Securities also spiked 9.6 per cent to 19.1 yuan. Citic Securities and Haitong Securities gained 4.9 per cent and 4.3 per cent each, ending at 17.99 yuan and 16.48 yuan.
In Hong Kong, local broker Bright Smart Securities Commodities Group leapt 11.2 per cent to HK$2.69. Haitong Securities improved by 4.9 per cent to HK$14.46, and Citic Securities tacked on 3.9 per cent to HK$18.66. Hong Kong Exchanges Clearing advanced 1.5 per cent to HK$200.2.
Other top gainers included New China Life Insurance, up 7.8 per cent to 46.66 yuan in Shanghai and up 7.2 per cent to HK$32.65 in Hong Kong, after the company announced that Fosun Group, controlled by Chinese billionaire Guo Guangdong, may continue buying the H-shares of New China Life over the next 12 months.
Property developers also jumped in both the mainland and Hong Kong.
China Vanke led the gains, surging 10 per cent to 25.06 yuan in Shenzhen and rising 2.7 per cent to HK$20.5 in Hong Kong.
Additional reporting by Jennifer Li