July 20, 2017 / 5:07 AM / 4 months ago

China, Hong Kong shares rise on buoyant global markets

* SSEC +0.2 pct, CSI300 +0.1 pct, HSI +0.3 pct

* New batch of SOE reforms expected in Q3

* Sunac shares surge to record high in Hong Kong

SHANGHAI/HONG KONG , July 20 (Reuters) - China’s blue-chip index rose to fresh 18-month highs early on Thursday, buoyed by solid corporate earnings and signs Beijing is stepping up restructuring of the country’s bloated state sector.

Hong Kong shares were also firm, with the benchmark Hang Seng index on track to rise for the ninth day, bolstered by buoyant global equity markets.

China’s blue-chip CSI300 index rose 0.1 percent, to 3,734.09 points by the lunch break, while the Shanghai Composite Index gained 0.2 percent, to 3,236.58 points.

The tech-heavy start-up board ChiNext rebounded more than 1 percent, partly inspired by a strong performance in the U.S. technology sector, which surged past its dotcom era peak on Wednesday. Still, ChiNext is down 2.4 percent so far this week as investors sought security in blue chips.

Ma Wenyu, strategist at Shanxi Securities, forecast that earnings of cyclical sectors such as mining and steel will continue to improve as Beijing steps up “supply-side reforms” to reduce redundant capacity, while “state-sector restructuring is expected to provide additional market catalyst”.

Leading construction companies, including Guangxi Liugong Machinery Co, XXMG Construction Machinery and Zoomlion Heavy Industry have forecast robust earnings growth in the first half, helped by government infrastructure investment.

Performance at several major coal miners also improved in the first half, thanks to government-led reform measures.

China will announce a new batch of “mixed-ownership reforms” in state-owned enterprises (SOEs) in the third quarter, the official Shanghai Securities News reported on Thursday.

Most sectors gained, with consumer and technology shares among the best performers.

HONG KONG

Hong Kong’s Hang Seng index added 0.3 percent, to 26,752.92 points, while the Hong Kong China Enterprises Index was unchanged at 10,861.82.

Gains in energy and industrial shares offset losses in consumer and raw material stocks .

Oil and gas giant PetroChina Co Ltd, the biggest energy stock by market value, rose 0.6 percent to its highest in more than two weeks aided by a 2 percent jump in oil prices on Wednesday.

Industrial stock China Merchants Port Holdings, which flagged a more than 50 percent rise in half-year expected profit last week, was among the top advancers on the benchmark, rising over 4 percent.

Tencent shares see-sawed after rising as much as 0.7 percent to HK$300 earlier. The Chinese gaming and social media firm has added about 11 percent so far since July 7 when it announced it would launch its mega-hit smartphone game in Europe and the United States this year.

Sunac China jumped as much as 16.2 percent to a record high after a deal with Dalian Wanda Group was reworked to sell assets to just Sunac after banks scrutinised their credit risk by bringing in Guangzhou R&F

Reporting by Samuel Shen and Rushil Dutta; Editing by Jacqueline Wong

Our Standards:The Thomson Reuters Trust Principles.
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