Mainland market, Shanghai-HK stock connect drive HK shares high

Hong Kong Hang Seng index hit its highest in the past seven months on Tuesday and climbed close to 24,000 points ending at 23,972 points on Wednesday, thanks to stronger Mainland market and the Shanghai-Hong Kong stock connect, which will be launched in October, financial experts told Xinhua.

"The surge (of Hong Kong stocks) was mainly due to the advance in Mainland A-shares, which moved up 1 percent yesterday," Head of Research of Core Pacific-Yamaichi Castor Pang said Wednesday, attributing the upward trend of the local index of late to the Mainland.

Pang said that while the People's Bank of China took no further action on positive purchase in the market, investors would think that the central bank is putting an easier measurement for the support of the economy. Thus, capital flowed into the stock market, with a considerable sum going to shares within the scope of Shanghai-Hong Kong stock connect.

In addition to the Shanghai-Hong Kong stock connect, investors' positive sentiment also helped lifting the local market, which, Pang said, was reflected by the high turnover and continue growth of the index on Wednesday.

The China Enterprises Index rocketed 2.03 percent, while the benchmark index ended 0.08 percent up on Wednesday.

"The investors are sanguine about the economy in near future," Pang said, adding the rise of the stock market was supported by multiple reasons.

Ronald Wan, a senior investment banker in Hong Kong, agreed that Shanghai-Hong Kong stock connect contributed to the rise of the local market.

"It is time (for investors) to work out for the Shanghai-Hong Kong stock connect as there are only two and a half months to go," Wan said, however, fluctuations would arise if there should be delay of the pilot program or speculation.

Besides, the restore of mainland economy and market liquidity were also of benefit to the Hang Seng Index. "Such a strong restoration of the liquidity was rarely seen in these one to two years and has become the greatest support of the index," Wan said.

Wan also expected the stock turnover to ascend as more capital is coming in. He said, echoing Pang, that easing of measures in Mainland, for example, real estate policy, is pulling capital towards local stock market.