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China, Hong Kong stocks rise as yuan depreciation fears ease

08/14/2015 | 12:57am EST
A man walks past a panel displaying the Hang Seng Index at the Hong Kong Exchanges in Hong Kong, China

SHANGHAI (Reuters) - China stocks climbed on Friday morning, with the Shanghai market heading for its biggest weekly rise in two months, as investors turned bullish after the central bank soothed fears created by the yuan's shock devaluation.

The yuan <CNY=CFXS> held steady against the dollar on Friday after suspected intervention by the central bank, who said on Thursday there was no reason for it to fall further.

"Yuan devaluation suddenly became a concern for stock investors earlier this week, but now this issue is fading out of their radar," said Qi Yifeng, analyst at consultancy CEBM.

"Some bold investors are going back into the market, chasing hot concepts, but I don't think they would hold the shares for a long time."

The Shanghai Composite Index <.SSEC> gained 0.8 percent, to 3,987.57 points, bringing the week's gain to 6.5 percent, the most since early June. The CSI300 index <.CSI300> rose 0.6 percent.

The Hong Kong market was also calmer, with both the Hang Seng index <.HSI> and the Hong Kong China Enterprises Index <.HSCE> up 0.2 percent at midday.

In a sign of improving confidence in the mainland market, the outstanding margin loans - money investors borrowed from brokerages to buy stocks - increased slightly over the past week, signalling an end to weeks of rapid deleveraging.

Waigaoqiao FTZ (>> Shanghai Wai Gao Qiao Free Trade Zone) surged 10 percent, the daily upward limit, after the Shanghai government-controlled company announced a major restructuring of its assets.

Investor interest in listed state-owned companies was also rekindled by a stock ownership incentive plan announced by Chinese liquor maker Wuliangye Yibin (>> Wuliangye Yibin Co., Ltd.).

Reform expectations pushed up prices of state firms including Luoyang Glass (>> Luoyang Glass Co.,Ltd.) and Guangdong Electric Power (>> Guangdong Electric Power Development Co.).

Many Tianjin-based companies, which slumped on Thursday following explosions in the northeastern port city, rebounded. Nearly a dozen companies issued statements saying their losses were limited.

The companies included Tianjin Port Holdings Co (>> Tianjin Port Company Limited), Tianjin Economic-technological Development Area Ltd (>> Tianjin Teda Co., Ltd.) and Binghai Energy (>> Tianjin Binhai Energy & Devel. Co., Ltd).

In Hong Kong, telecommunications <.HSCIT> and Utility stocks <.HSCIU> led gains, while energy <.HSCIE> and property shares <.HSCIPC> fell.

(Editing by Richard Borsuk)

© Reuters 2015
Stocks mentioned in the article
ChangeLast1st jan.
GUANGDONG ELECTRIC POWER DEVELOPMENT CO., LTD. 0.00% 3.66 End-of-day quote.-5.67%
HANG SENG 0.39% 28620.49 Real-time Quote.5.10%
LETS HOLDINGS GROUP CO., LTD. 1.58% 7.72 End-of-day quote.-0.77%
LUOYANG GLASS COMPANY LIMITED 4.31% 17.66 End-of-day quote.-9.34%
RISE, INC. 0.00% 24 End-of-day quote.0.00%
S&P/CITIC 300 INDEX 0.00% 4815.57 Delayed Quote.4.84%
S&P/CITIC 50 INDEX 0.00% 4871.64 Delayed Quote.4.45%
SHANGHAI STOCK EXCHANGE B SHARES INDEX 0.06% 250.6612 Real-time Quote.2.95%
SHANGHAI WAIGAOQIAO FREE TRADE ZONE GROUP CO., LTD. 0.22% 13.71 End-of-day quote.-1.86%
TIANJIN BINHAI ENERGY & DEVELOPMENT CO.,LTD 3.00% 5.15 End-of-day quote.-27.46%
TIANJIN PORT CO., LTD. -0.42% 4.78 End-of-day quote.0.00%
TIANJIN TEDA CO., LTD. 1.18% 5.13 End-of-day quote.0.59%
US DOLLAR / CHINESE YUAN RENMINBI (USD/CNY) 0.00% 6.48 Delayed Quote.-0.78%
WULIANGYE YIBIN CO.,LTD. -0.59% 287.7 End-of-day quote.-1.42%
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