Hong Kong makes biggest gain in three weeks as China increases QFII quotas
Hong Kong shares made their biggest single-day gain in six weeks, after China announced it would increase the limit that foreign QFII funds can invest in China's domestic markets. The Shanghai and Shenzhen bourses, which had already closed before the announcement, made small gains.
The Hang Seng Index rose 3.1 percent, with the Hang Seng China Enterprises Index, representing top Hong Kong-listed mainland companies adding 3 percent.
The State Administration of Foreign Exchange (SAFE) published new draft rules on its website today that would allow the amount qualified foreign investment institution (QFIIs) funds can invest in Shanghai and Shenzhen A-shares by 25 percent to US$1bn. The lockup period for some investors will also be cut to three months from one year.
Foreign funds have been thought to be partly responsible for Monday's dramatic sell-off which brought the Shanghai index down a dramatic 6.7 percent.
The Shanghai Composite Index - which closed before the announcement - was up 0.6 percent, continuing its 4.8 percent rise yesterday prompted by the announcement from the China Securities Regulatory Commission Vice Chairman Liu Xinhua that the regulator would act to promote the steady development of the country's financial markets.
The Shenzhen Composite Index was up 1.2 percent.
Steelmakers fell on concerns about overcapacity. Baoshan Iron & Steel Co. (SH:600019), the biggest, fell 1 percent. Jinan Iron & Steel (SH:600022) dropped 1.7 percent.
Inner Mongolia Baotou Steel Rare Earth Co. (SH:600111) rose another 5.5 percent today and 25 percent since Wednesday, after foreign press reported China would further restrict rare earth supply.
Zhao Shuanglian, vice chairman of the Inner Mongolia Autonomous Region - which contains 75 percent of China's rare earth reserves - responded in the local press yesterday, saying:
"We should by no means lay too much stress on raising the price of rare earth in the short-term. We are aiming to make Baotou in Inner Mongolia into a world-class rare earth industrial base."
Hong Kong-listed China Rare Earth Holdings Limited (HK:0769) rose 6.6 percent today.
Related news
- Shenzhen up 1.1pct as brokerages support mainland markets while Hong Kong falls on real estate concerns
- Mainland and Hong Kong markets fall most in weeks
- Mainland stock mixed, pharma shares up as U.S. declares H1N1 national emergency
- China markets rise as Shenzhen launches Growth Enterprise Board and hot money starts flowing in again
- China markets slip again despite 8.9pct growth figure for third quarter
- China markets down on profit taking and crude oil drop
- China markets up as Hang Seng property index surges 5.8pct and mainland financials rise gain 2pct
