China's benchmark stock index rose to a three-year high, led by financial companies, amid speculation the start of an exchange link with Hong Kong and relaxed curbs on day trading will boost earnings.
Bank of China Ltd. jumped 10 percent in Shanghai and Industrial & Commercial Bank of China Ltd. surged the most in four years after the two lenders were picked as settlement banks for trading shares via the stock-link program. Haitong Securities Co. led a rally for brokerages, gaining 4.4 percent. Small-company shares and technology companies slumped.
The Shanghai Composite Index advanced 1.1 percent to 2,500.76 at 1:09 p.m. local time, even as two stocks fell for every one that rose. The benchmark index’s trading volumes doubled from the 30-day average after posting a 2.3 percent jump yesterday on the announcement the Shanghai Hong Kong exchange link will begin on Nov. 17. Shanghai’s stock exchange will speed up its review of a proposal to scrap rules that prevent investors from buying and selling the same shares in one day.
“Stocks are rallying for a second day on the connect,” said Mao Sheng, an analyst at Huaxi Securities Co., referring to another name for the exchange link. “Banks are rising as the connect will attract institutional investors from Hong Kong, while brokerages are gaining” as potential same-day trading could increase volumes, he said.
The CSI 300 Index added 1 percent. The Hang Seng China Enterprises Index climbed 1.2 percent. The Hang Seng China AH Premium Index rose 1.8 percent to 102.60, the highest since September 2013. This signals mainland dual-listed shares were trading at a premium to their Hong Kong counterparts. The Hang Seng Index advanced 0.6 percent, led by casino operators.