Hong Kong China shares rebound; banks, oil firms lead
Duvvuri Subbarao, governor of the Reserve Bank of India, spoke extensively to NDTV Profit about the thinking behind the rate cut, and what to expect going forward.
Hong Kong shares bounced back after two days of losses on Wednesday as stronger overseas markets and a turnaround in the mainland markets on easing concerns over China's economic growth spurred some short-covering.
The Hang Seng index ended the morning session up 1.2% at 20,808.86, recovering all its losses over the past two sessions. The Shanghai Composite rose 1.3%.
Traders attributed the rally in Shanghai to news that South Korea's central bank would buy $300 million in Chinese stocks over the next three months, and to a report that a Chinese government researcher expects economic growth to accelerate in the second-half.
"Those comments are certainly drivers," said a Hong Kong-based trader at an American brokerage.
"Besides, abundant liquidity has given A-shares good support recently. You can see repo rates are falling again today," said the trader, pointing to the seven-day bond repo rate that is considered a barometer of cash in the financial system and driver for mainland stock markets.
The rate, currently at 3.5%, is down from 4.23% on six-week peak of 4.2% on April 6.
In Hong Kong, where short-selling has remained above the average 8 percent level, some bearish bets were covered following the biggest gains on Wall Street in a month and a better-than-expected Spanish debt auction.
Petrochina shares rose 2.7%, providing the biggest boost to the benchmark of China shares in Hong Kong , followed by financials such as China Construction Bank and ICBC, both up 1%, which were sold over the past two days.
HSBC Holdings rose 1.7% as worries over Spanish debt receded after Madrid sold a more-than-planned 3.2 billion euros ($4.21 billion) of 12- and 18-month bills on Tuesday due to good demand from domestic banks.
Most Chinese banks are expected to report first-quarter results next week and analysts at Citigroup expect the earnings growth for the sector to slow markedly year-over-year due to slower net-interest marging expansion.
Net interest margins, a key metric to measure profitability of banks, are likely to decline across the board reflecting a peaking of loan pricing and continued demand for deposits, analysts Simon Ho and Paddy Ran said in a note.
Chinese property developers reversed earlier losses, with a sector sub-index in Shanghai up 1.6 percent by midday despite data showing the first annual drop in home prices since the government launched measures to curb the sizzling property sector two years ago.
"This is further evidence of China's property macro control measures," said Ma Xiaoming, the NBS' senior statistician in a statement published alongside the data.
Shenzen-listed China Vanke rose 2.6% while Polly Real Estate rose 3.4%.
Copyright Thomson Reuters 2012