HK, Mainland Shares Surge On Reform Hopes

Hong Kong and most regional markets surged on Monday, with the mainland shares leading the way boosted by optimism that President Xi Jinping may announce reforms as he visits Shenzhen later in the week.

In Hong Kong, the Hang Seng Index opened slightly higher in the morning, and rose almost 500 points in the morning session.

The benchmark index climbed further in the afternoon and closed 2.2 percent or 530 points up at 24,649.

Market turnover was more than HK$140 billion.

Mainland banks are among the top gainers, with shares of China Construction Bank surging almost 6 percent. Shares of index heavyweight Tencent rose more than 3 percent.

Across the border, markets extended their rally to post their biggest daily percentage gain in three months.

The Shanghai Composite Index jumped over 2 percent, posting its best session since late July. And the blue-chip CSI300 index rose 3 percent, its best day since July 6.

Shares of some Shenzhen-based companies jumped in particular, as investors cheered Beijing’s support for the country’s first special economic zone.

Across the region, Tokyo bucked the upward trend and fell 0.3 percent, as concerns about upcoming corporate earnings led to profit-taking.

Meanwhile, Seoul rose for the eighth straight session and gained 0.5 percent, Taipei also climbed half a percent and Singapore closed higher.

As for the currencies, the yuan has weakened and fell from a 17-month high after a policy tweak by the mainland’s central bank.

Over the weekend, the People's Bank of China (PBOC) slashed the reserve requirement ratio for banks when conducting some foreign exchange forwards trading from 20 percent to zero.

Analysts said that made it cheaper to short the currency, with some saying the move suggested unease among mainland authorities by the recent appreciation of the yuan.