Hong Kong stocks post record close

Hong Kong stocks posted their highest ever close on Tuesday, boosted by a flood of cash from mainland Chinese investors and a worldwide surge in optimism about the global economy. The Hang Seng Index leapt 1.81 percent, or 565.88 points, to close at 31,904.75 -- its best finish since October 30, 2007. The benchmark Shanghai Composite Index advanced 0.77 percent, or 26.10 points, to 3,436.59 and the Shenzhen Composite Index, which tracks stocks on China's second exchange, gained 0.72 percent, or 13.79 points, to 1,927.56. The HSI is now within spitting distance of its all-time record of 31,958.41 and analysts widely expect it to break that barrier soon as markets across the planet rally on economic optimism, and hopes for strong corporate profits following Donald Trump's huge tax cuts last month. Spurred on by successive records on Wall Street, the financial hub's market surged more than a third in 2017 and has started the new year in blistering form, having risen a record 14 straight days until a small loss on Monday. Everbright Sun Hung Kai analyst Kenny Wen said he saw the HSI breaking 34,000 by the end of the year thanks to a weaker US dollar and expectations for better company earnings. He also pointed to increasing interest from mainland investors -- using a cross-border stock connect programme -- who have been attracted by relatively cheap valuations compared with markets in Shanghai and Shenzhen. And despite the latest surge Raymond Cheng, Hong Kong-based head of Asia equity strategy at JPMorgan's private bank unit, said the gains were to be expected. "Look at the overall scheme of things: we have had how many years of downtrend? Almost eight or nine years," he told Bloomberg News. "Yes, last year we had a big rally, but it's well-justified in my mind by the earnings pick-up." - Rollercoaster ride - The market has had a rollercoaster ride since its 2007 peak, which was followed by a plunge of 67 percent within a year and a half as it was hammered by the global economic crisis. It then saw gradual recoveries hit in 2011 by the European debt crisis and then the collapse of the Chinese equity bubble in 2015. One of the biggest gainers Tuesday was Hong Kong Exchanges and Clearing, which runs the bourse. The firm rose 5.87 percent to HK$288.40 and is up about 25 percent over the past month. Market heavyweight Tencent, the first Asian firm to join the exclusive global club of $500 billion market cap firms last year, was up 2.54 percent at HK$444.20. In mainland China the Shanghai index resumed its upward momentum, having fallen Monday to end an 11-day winning streak. "Real estate shares have been largely underestimated and investors became more optimistic on their sales," said Li Daxiao, an analyst with Yingda Securities. "A stronger yuan could also help the real estate industry draw more investment." The strengthening yuan provided support, having hit a more than two-year high 6.4138 against the dollar on Monday following news that Germany's central bank would include the Chinese currency in its own reserves, the latest step towards its internationalisation. The announcement follows the International Monetary Fund's decision in 2016 to include the yuan in its elite basket of currencies. Attention now turns to the release on Thursday of China's economic growth data for 2017, with forecasts for a pick-up from the year before. Real estate shares rallied. Shanghai-listed Greenland Holdings surged its 10 percent daily limit to 10.13 yuan and Shenzhen-listed China Merchants Shekou Industrial Zone Holdings jumped its 10 percent daily limit to 23.93 yuan. Banks also advanced in Shanghai. Banking giant ICBC added 2.49 percent to 6.59 yuan and China Construction Bank gained 1.98 percent to 8.23 yuan.