China blue-chip index extends gains as punters up leverage; HK shares rise

Last Updated: Fri, Nov 25, 2016 10:20 hrs

* SSEC -0.1 pct, CSI300 0.2 pct, HSI 0.4 pct

* China's outstanding margin financing rise to near one-year high

* China market uptrend confirmed - brokerage

SHANGHAI, Nov 25 (Reuters) - China's blue-chip CSI300 Index looked set for a fifth day of gains on Friday and possibly cap the gauge's best week in three months, as investors borrow the most in nearly a year to bet on equities amid signs of stabilisation in the economy.

Hong Kong shares also rose, as the Thanksgiving break in the United States helped slow a relentless surge in the U.S. dollar that has sucked capital out of most emerging markets.

The CSI300 index rose 0.2 percent, to 3,495.93 points at the end of the morning session, hitting the highest level in nearly 11 months.

Barring a correction, the index, which tracks the biggest companies listed in Shanghai and Shenzhen, will score a five-day winning streak.

Also reflecting rising investor confidence, a nearly 1 percent mid-morning correction in the Shanghai Composite Index quickly attracted bargain hunting and helped erase the loss to just 0.1 percent by midday break.

With the economy showing signs of stabilization, and even some recovery in certain sectors, a growing number of brokerages are starting to turn optimistic.

"The upward trend of the market has already been confirmed," Lianxun Securities said in its latest strategy report.

"Any correction is at most technical in nature, and will not change this upward trend."

The brokerage said China's stock market is becoming increasingly attractive to investors amid the backdrop of Beijing's real estate curbs, a fragile bond market, and high volatility in the futures market.

Modestly-valued blue-chips with high dividend ratios and ample cash are especially tempting to yield-seeking institutions such as insurers, which have made a series of high-profile share acquisitions recently, it said.

Such optimism has also emboldened stock punters to boost their leveraged bets. Outstanding margin financing - money investors borrow to buy stocks - has jumped to over 956 billion yuan this week, up 50 billion yuan from end-October, and hitting the highest level since December, 2015.

Real estate and banking shares were firm on Friday morning, but resources shares pulled back after strong rallies recently.

In Hong Kong, the Hang Seng index added 0.4 percent, to 22,690.49 points, while the Hong Kong China Enterprises Index gained 0.8 percent, to 9,752.81, as Asian markets generally rose.

(Samuel Shen and John Ruwitch)

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