Saturday, May 28

Hong Kong stocks hit month high after China gives concession in audit dispute

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HONG KONG — Hong Kong stocks reached a one-month high on Monday, led by Hong Kong-US dual listed companies, after a weekend statement from China’s securities watchdog allayed investors fears’ that such firms would be forced to delist from the United States.

** The Hang Seng Index closed 2.1% higher at 22,502.31 points, its highest close since March 1. The Hong Kong China Enterprises Index gained 3.1% to 7,770.98.

** Mainland Chinese markets were closed for a holiday. Both Hong Kong and mainland markets will also be closed on Tuesday.

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** The China Securities Regulatory Commission, on Saturday, proposed revising confidentiality rules involving offshore listings, removing a legal hurdle to Sino-US cooperation on audit oversight. Instead, the onus for protecting state secrets will be put on Chinese companies.

** Baidu finished the day 7.77% higher, Yum China gained 5.33% and Weibo added 3.4%. All three had been named by the US Securities and Exchange Commission as possibly facing delisting from the United States under rules requiring the US accounting regulator to have access to audit working papers of US listed companies.

** “Investors’ concerns about the delisting of Chinese dual listing stocks in the United States have been reduced, which is the most important factor for the performance of the stock market today,” said Kenny Ng, securities strategist at China Everbright Securities International.

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**The Hang Seng Tech Index jumped 5.43%.

** “Mainland property stocks continued to perform well also, which is related to the recent measures introduced by some local governments in the mainland. How effective these measures are depend on whether sales figures will pick up significantly in future,” Ng added. * * The Hang Seng Mainland Property Index rose 6.38%, with developer Country Garden, up 8.36%, at the fore. The Hang Seng Property index gained 3.05%.

** Country Garden’s property management unit, Country Garden Services Holdings Co Ltd, which rose 16.16%, was the top gainer on the Hang Seng while the biggest loser was Budweiser Brewing Company APAC Ltd, down 3.31%.

** The sub-index of the Hang Seng tracking energy shares rose 0.75%, the IT sector rose 4.37%, and the financial sector ended 0.76% higher.

** Hong Kong’s leader Carrie Lam announced on Monday that she would not run for a second term in this year’s chief executive election, but Ng said this was not a major factor for markets. (Reporting by Alun John; Editing by Uttaresh.V and Jacqueline Wong)