Hong Kong stocks rally to seven-year high as volatility surges

Hong Kong stocks climbed to the highest level since December 2007 as volatility surged and an unexpected drop in Chinese exports spurred speculation that authorities will increase stimulus to support economic growth.
Hong Kong Exchanges & Clearing Ltd. jumped 19 percent as Goldman Sachs Group Inc. raised its target price. China Merchants Bank Co. climbed by a record in Hong Kong after announcing plans to sell shares. Almost all foreign-currency B shares traded on mainland exchanges gained by the 10 percent daily limit. Data yesterday showed overseas shipments fell 14.6 percent in Marchin yuan value, while imports also slumped.
The Hang Seng Index rose 2.7 percent to 28,016.34 at the close. The benchmark gauge has climbed 14 percent in an eight-day rally after mainland authorities made it easier for domestic funds to use the cross-border bourse link. The Hang Seng China Enterprises Index of Chinese stocks traded in the city advanced 4.3 percent, while the Shanghai Composite Index climbed 2.2 percent.
“The investor in Shanghai is realizing that there is a better risk-return opportunity on offer in Hong Kong,” Jonathan Garner, Hong Kong-based chief strategist for Asia and emerging markets at Morgan Stanley, said in a phone interview. “We now see a greater likelihood of the Hang Seng’s valuation converging with its own long run average. The catalyst is the inflow from the Shanghai investor via the connect program.” Bloomberg