China H Shares Rise to 23-Month High as Financial Stocks Advance

(Bloomberg) -- Chinese shares traded in Hong Kong closed at the highest level since August 2015 as insurers and brokerages advanced, while energy companies extended Monday's rally.

The Hang Seng China Enterprises Index climbed 1.8 percent. Financial stocks accounted for the top 13 gainers, with New China Life Insurance Co. rising 6.9 percent and Huatai Securities Co. adding 3.3 percent. Energy companies extended Monday's rally as PetroChina Co. and China Petroleum & Chemical Corp. advanced at least 1 percent amid earnings optimism and as oil headed higher. The Shanghai Composite Index climbed for a fifth day, the longest run of gains since February.

Chinese shares in Hong Kong have fared better than those on the mainland this year as an official campaign to cut financial leverage drove investors to seek safe haven in the city. Mainland equities still trade at a nearly 28 percent premium to Hong Kong listed peers, near their most expensive level in almost a year.

"Gains are led by financial stocks on expectations of solid first-half earnings," said Linus Yip, Hong Kong based strategist with First Shanghai Securities. "The Caixin data offer the latest sign of strength in China's economy, which is also boosting sentiment."

The Caixin China purchasing managers index came in at 51.1 for July, beating the 50.4 forecast in a Bloomberg survey. China's official factory gauge slowed a bit in July as a push by authorities to curb financial risks spread.

• HSBC Holdings Plc and China Merchants Bank Co. are among Hong Kong-traded financial companies whose shares jumped on results announcements as the earnings season gets underway. China Merchants climbed 2.3%, following a 2.8% surge last Tuesday after reporting an 11.4% jump in first-half net income. HSBC rose 0.5%, adding to Monday's 2.6% advance, after announcing a second quarter of revenue growth and plans to return another $2 billion of cash to investors.
• Insurers advanced on an upbeat outlook for 1H results, analysts say. China Pacific Insurance Group Co. and Ping An Insurance Group Co. jumped at least 4 percent.
• MGM China Holdings Ltd. rose 1.3% after Macau's gross gaming revenue increased 29% from a year earlier, beating a median estimate of 26% growth in a Bloomberg survey.
• Chinese developers in Hong Kong bucked the overall market gain as investors took profits after an industry gauge hit an all-time high last week. Shimao Property Holdings Ltd. and Country Garden Holdings Co. dropped at least 3.9%.

To contact Bloomberg News staff for this story: Amanda Wang in Shanghai at twang234@bloomberg.net.

To contact the editors responsible for this story: Robin Ganguly at rganguly1@bloomberg.net, Ryan Lovdahl, Sarah McDonald

With assistance from Amanda Wang