Hong Kong stocks close 2.08% higher

Hong Kong stocks climbed 2.08 percent Friday, adding to a near four percent surge in the previous session after China moved to prevent a mainland market crash while Greece submitted debt reform plans that fuelled hopes it will remain in the eurozone.

The benchmark Hang Seng Index added 508.49 points to 24,901.28 on turnover of HK$ 180.22 billion (US$ 23.25 billion).

While traders ended the week on a high, the HSI was still down 4.5 percent over the week, having suffered massive losses between Monday and Wednesday.

The city’s China Enterprise Index, a gauge of mainland firms listed in Hong Kong and which saw wild volatility through the week, ended up 3.60 percent Friday. But for the week it lost about six percent.

The Hong Kong market had been surging after Chinese authorities in April relaxed rules on cross-border trading using the stock connect programme, leading to a flood of investment from the mainland.

But contagion from a sell-off in China since last month filtered into the financial hub as Chinese investors began pulling their cash out of the city’s exchange.

Shanghai stocks plunged by about a third after hitting a June 12 peak owing to fears about tough new investment rules and high valuations, dragging regional markets with it this week.

Despite a series of measures over two weeks, the blood-letting was only staunched when Beijing on Wednesday said it would stop “major” shareholders — those holding at least a five percent stake — from selling and launched a probe into short-selling.

Short-selling is the selling of stock a trader does not own, in anticipation of a future fall in prices.

Source: AFP