Hang Seng Shares Rally After Goldman Predicts Index Could Hit 29,000

Hang Seng Shares Rally After Goldman Predicts Index Could Hit 29,000
Hang Seng Shares Rally After Goldman Predicts Index Could Hit 29,000

In Asia Wednesday, Hong Kong's Hang Seng Index climbed 2% to 24,145 and China's Shanghai Composite Index slipped 0.5% to 3,031. Markets in Tokyo were closed in honor of Japan's Culture Day.

Shares in Hong Kong hit a two-year high after Goldman Sachs predicted that the Hang Seng could reach 29,000 in the next year, according to Bloomberg BusinessWeek. That, combined with anticipation of a new round of U.S. economic stimulus measures expected to total $500 billion, was good news for Asian markets. Extra liquidity in the markets is sure to flow steadily toward the East, where economic opportunities abound.

Investors poured money into Hong Kong property shares, with Sun Hung Kai soaring 6.6%, Cheung Kong climbing 2.6% and Henderson Land surging 2.4%. Swire Pacific, with businesses ranging from trading to aviation and commercial properties like the Pacific Place Mall in it's portfolio, catapulted up 4.9%, and Wharf Holdings, the owner of Hong Kong's enormous Harbour City Mall just across the harbor, rose 1.7%.

Hong Kong-based real estate developers focused on China also shot up, with Sino Land rising 3.4%, New World Development gaining 2.9%, and China Resource Land up 1.7%.

Some Hong Kong-listed airlines also rose: Shares of Cathay Pacific, Hong Kong's largest airline and a company whose largest shareholder is the aforementioned Swire Pacific, soared 2.1%, and Air China climbed 3.8%.

Hong Kong cargo shipping firms also rallied, with Cosco Pacific rising 5.6%: The company has reported that its quarterly net profits more than doubled in the third quarter. China Merchants Holdings gained 5.1%, with Bloomberg reporting that the company's net income for the first half of the year have increased 12% on a global trade recovery.

Some Air Comes Out of China's Commodities Bubble

In the banking sector, Industrial & Commercial Bank of China shot up 4.5%, Bank of China rose 2.3%, and Bank of Communications gained 2%.

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In China, there were big losses among commodity producers as analysts warned that recent high valuations of raw materials companies were overblown. Jiangxi Copper slumped 6.4%, and Tongling Nonferrous Metals fell 6.5%. Among steel producers, Wuhan Iron & Steel tumbled 3%, Maanshan Iron & Steel declined 2.4%, and Baoshan Iron & Steel fell 2%.

Chinese coal mining firms, which had seen their stocks spike due to predictions of an especially cold winter, also slumped today. Yanzhou Coal Mining plummeted 7%, Datong Coal plunged 5%, and China Coal Energy lost 1.7%. In contrast, Chongqing Three Gorges Water Conservancy & Electric Power jumped 6.4%. The company provides hydroelectric power, which is indisputably cleaner than coal, but the damming of the Yangtze River to provide that power comes with its own raft of problems, including possible earthquakes and mudslides and the probable extinction of the pink Chinese river dolphins that called the river their home. According to the BBC, they would be the first large vertebrate species to become extinct in the past 50 years.