Hong Kong stocks post biggest gain in two weeks as China buyers pour in
April 21 (Reuters) - Hong Kong stocks posted their biggest daily gain in two weeks on Tuesday on signs that investors in mainland China are keen to plow more money into the city's markets, hunting for bargains.
The Hang Seng index jumped 2.8 percent to 27,850.49 points, while the China Enterprises Index gained 3 percent to 14,531.28 points.
The official Shanghai Securities Journal reported on Tuesday that trust companies on the Chinese mainland are flooding into the Hong Kong stock market, and are facing a shortage of overseas investment quotas.
Adding to signs of more money inflows, Bosera Asset Management Co on Monday launched China's second mutual fund product that buys Hong Kong stocks under the Shanghai-Hong Kong Stock Connect scheme.
"Over the next six months, there will still be huge arbitrage opportunities," despite the recent Hong Kong market surge, fund manager Zhao Yang said.
He predicted that with more southbound money flowing in, the valuation of Hong Kong stocks will move closer to their mainland peers, which currently trade at a 28 percent premium.
Index heavyweight Tencent Holdings Ltd rose nearly 4 percent. Rating agency Standard & Poor's Ratings Services said on Tuesday that it had raised its long-term corporate credit rating on Tencent to 'A' from 'A-', to reflect the firms' improving profitability.
Among the most actively traded stocks on Hong Kong's main board were China National Culture Group, up 8.5 percent to HK$0.14; Ping Shan Tea, up 1.6 percent to HK$0.06 and China Jinhai, down 23.4 percent to HK$0.82.
Total trading volume of companies included in the HSI index was 2.8 billion shares. (Reporting by Samuel Shen and Pete Sweeney; Editing by Kim Coghill)
© Thomson Reuters 2017 All rights reserved.