Hong Kong Stocks Flirt With Bull Market

Hong Kong stocks were close to entering a bull market Thursday, in yet another sign of the building confidence among global investors that central banks will soon roll out measures to boost economies.

The Hang Seng Index was last up 0.6% at 22003.65, having risen in six of the past seven trading sessions. Property and financial stocks propelled the benchmark's recent gains, with those sectors up 2.5% and 1.5%, respectively, this week.

Hong Kong's equity gains in the morning tilt the Hang Seng Index into positive returns for the year to date, and it is up more than 20% from its low in mid-February. If it keeps the gains to the close, it will enter bull market territory.

Elsewhere Thursday, the Nikkei Stock Average was up 1.3%, Australia's S&P/ASX 200 was up 0.6% and South Korea's Kospi was roughly flat.

The rally in Asia tracks move by U.S. stocks to record highs, as investors look to central banks from Europe to Japan to enact coordinated easing following the U.K.'s vote to leave the European Union. Corporate earnings and strong economic data out of the U.S. also buoy sentiment in Asia.

"Central bank expectations are the major driver, with good earnings from the bellwethers keeping the momentum going,"" said Bill Bowler, equities trader at Hong Kong-based brokerage Forsyth Barr Asia Ltd. Overnight, gains in Microsoft Corp. helped the Dow to its seventh consecutive record, with the firm reporting better-than-expected earnings after the close.

In Hong Kong, some of the buying has come from Chinese mainland investors, who have increasingly bought blue-chip stocks through a trading link between Shanghai and Hong Kong. Usage of the southbound quota for that link has risen to a high of 81%.

On Thursday, New World Development Co. Ltd. jumped 1.5%, Cheung Kong Property Holdings Ltd. rallied 1.6% and Sun Hung Kai Properties was up 1.4%. Investors were betting that the city's property market bottomed in March. Home prices have risen 2% since then, according to a report yesterday by Citi.

Shares of HSBC Holdings PLC were up 0.6%, despite news overnight that a foreign-exchange executive at the firm was arrested for allegedly front-running a $3.5 billion currency trade for a client. The firm's stock is off 18.34% year-to-date, one of the worst performers on the Hang Seng.

Investors are watching Bank Indonesia, which may be tempted to cut interest rates on Thursday to support weak domestic demand, according to eight of 15 economists polled by The Wall Street Journal. Indonesia's JSX benchmark was last up 0.3%.

But the greatest hope for stimulus in the region remains the Bank of Japan, scheduled to meet on July 28-29. Local media reported today that a government fiscal stimulus package could amount to 20 trillion yen ($187 billion).

The Japanese yen traded as weak as 107.24 yen to one U.S. dollar Thursday. A weaker local currency supports the competitiveness of Japanese exporters.

Prices of Brent crude oil was last up 0.5% at $47.38 a barrel.

Kenan Machado and Kosaku Narioka contributed to this article.

Write to Chao Deng at [e-mail]

(END) Dow Jones Newswires

July 21, 2016 00:55 ET (04:55 GMT)

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