HK shares record best month since March

Hong Kong shares posted their biggest monthly gain in 10 months, buoyed by a rebound in the offshore yuan and optimism that U.S. economic growth will pick up.

The Hang Seng Index closed little changed Friday, recording a 6.2 percent advance for January, the most since March. The offshore yuan appreciated 1.5 percent this month, set for the biggest gain since October 2011. Equity trading in Hong Kong ended at noon Friday and will resume on Feb. 1 after the Lunar New Year holidays. Chinese onshore markets are shut through Feb. 2.

A 1.3 percent drop in the Bloomberg Dollar Spot Index so far this year has brought some relief to Chinese assets after accelerated declines in the yuan and increased capital outflows weighed on the nation’s bonds and equities in December. Global shares rallied this month – with the Dow Jones Industrial Average reaching a record – amid strengthening earnings and optimism that President Donald Trump will boost fiscal spending in the U.S. Hong Kong’s currency peg to the U.S. dollar means the city has to follow American monetary policy.

The Hong Kong Hang Seng Properties Index has jumped 9.5 percent last month in the biggest increase since July. Hang Lung Properties Ltd. surged 17 percent in January, the biggest gain on the benchmark Hang Seng Index. China Overseas Land & Investment Ltd. climbed 12 percent, the most since April 2015.

A measure of home prices rose to near a record high at the end of December, weathering an increase in U.S. interest rates and a stamp duty that was imposed in November. Hong Kong’s residential property market is likely to hold up well in 2017, with a forecast 5 percent year-on- year rise in prices, Daiwa Capital Markets Hong Kong Ltd. analyst Jonas Kan wrote in a Jan. 26 note. Justina Lee, Bloomberg