China’s H Shares Rebound From Three-Week Low on Energy Companies

(Bloomberg) -- Chinese stocks traded in Hong Kong rebounded from a three-week low amid optimism that the central bank will ease policy to spur growth. Energy producers and automobile companies led gains.

The Hang Seng China Enterprises Index climbed 1.2 percent, with the advance paced by China Shenhua Energy Co. and Great Wall Motor Co., among the biggest decliners over the previous two days. PICC Property & Casualty Co. climbed for the first time in two weeks to lead insurers higher. The Shanghai Composite Index was little changed at the close, halting a four-day rally.

The advance comes after Hong Kong shares retreated in the past two days amid concern Britain's vote to exit the European Union will weigh on the global economy. Asian equities advanced as oil prices rose and investors awaited U.S. payrolls data due on Friday that will be key to judge the Federal Reserve's policy outlook.

“There is some bargain hunting and some optimism for policy support,” said Daniel So, strategist at CMB International Securities Ltd. “But Hong Kong stocks' outlook will be choppy over the next few weeks because of Brexit and risks in Europe.”

The H shares gauge rose to 8,600.99 at the close in Hong Kong, and the Hang Seng Index advanced 1 percent. The Shanghai gauge fell less than 0.1 percent to 3,016.85.

China Shenhua climbed 3.7 percent, its steepest advance in more than two weeks. PetroChina Co. and China Petroleum & Chemical Corp. increased at least 1.9 percent as U.S. crude rose toward $48 a barrel before data that's forecast to show stockpiles fell. Great Wall Motor jumped 4.1 percent, while PICC Property & Casualty increased 4.2 percent, rising for the first time since June 22.

Shanghai Shares

The Shanghai gauge halted its streak of advances after its 14-day relative-strength index climbed to 68.3 on Wednesday, near the threshold of 70 that some traders see as a signal a rally is about to reverse. Expectations that China will announce more stimulus to support the economy have supported a rally in mainland shares this week.

While the index is still down nearly 15 percent this year, A shares have been relatively insulated from Brexit worries. The Shanghai gauge has climbed 4.3 percent since the U.K. referendum to emerge as the world's best-performing benchmark after Ukrainian and Vietnam equities.

Data released Thursday showed China's foreign-exchange reserves unexpectedly climbed to $3.21 trillion in June, beating the $3.17 trillion analysts expected. Figures due next week are forecast to indicate a third monthly drop in exports in U.S. dollar terms.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net. To contact the editors responsible for this story: Robin Ganguly at rganguly1@bloomberg.net, Philip Glamann, Phani Varahabhotla