(Bloomberg) -- Hong Kong stocks posted their longest winning run in a month as energy producers rallied amid optimism that higher oil prices will boost earnings.
The Hang Seng Index climbed 0.7 percent, extending a four-day advance to 2.8 percent. Oil-related companies dominated the market, with PetroChina Co. reaching a four-month high and China Shenhua Energy Co. advancing to the strongest close since July last year. A measure of Chinese stocks traded in Hong Kong added 1.4 percent.
Oil futures rose to a three-month high in New York on Wednesday as data showing declining U.S. crude stockpiles eased inventory overhang concerns. Energy companies account for four of the 10 biggest gainers on the Hang Seng Index this week, with PetroChina and Cnooc Ltd. surging more than 9 percent. Mainland property companies are the largest losers, with China Resources Land Ltd. tumbling 5 percent as more cities moved to cool property prices.
“The main driver is a rally in oil prices,” said Jingyi Pan, a Singapore-based strategist at IG Asia Pte. “The oil price increase outweighs concerns about a Fed hike at the moment. For emerging markets, volatility will rise occasionally, as shown yesterday when we had some taper tantrum. For October, we may see sideways movements until early November when we have the U.S. presidential election.”
Bloomberg News reported Tuesday that the European Central Bank is likely to gradually taper asset purchases, while senior Federal Reserve officials called for tighter monetary policy. Strong U.S. services data bolstered the case for a U.S. interest-rate increase this year, with traders putting the odds of a December move at 62 percent.
The Hang Seng Index closed at 23,952.50, after briefly crossing the 24,000 level. The Hang Seng China Enterprises Index rose for a fourth day, while mainland Chinese markets were shut for a week-long holiday. The Hang Seng Index tends to climb before U.S. elections, Jefferies Group LLC strategists led by Sean Darby wrote in a note on Thursday. PetroChina's relative strength index advanced beyond 70, a level that indicated to some traders that an asset is overbought.
Anhui Conch Cement Co., China's largest cement maker, extended a four-day rally. Short interest in the company climbed to 14.5 percent of its outstanding shares on Monday, the highest since February 2015 and five times the level seen seven months ago, according to latest data compiled by IHS Markit Ltd. and Bloomberg.
Lenovo Group Ltd. jumped 1.5 percent after a Bloomberg report said that the company is in talks with Fujitsu Ltd. to merge their personal-computer businesses. The Chinese manufacturer will take a majority stake in the venture, said a person with knowledge of the matter. Galaxy Entertainment Group Ltd. surged 3.8 percent on Thursday.
In the currency market, the offshore yuan traded in Hong Kong weakened beyond 6.7 per dollar for the first time since Sept. 12. It was last trading little changed at 6.6986.
To contact the reporter on this story: Kyoungwha Kim in Hong Kong at kkim19@bloomberg.net. To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, Robin Ganguly
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