China stocks edged higher on Monday morning, as investors returning from the long Mid-Autumn Festival holiday drew optimism from surveys showing improving business confidence.
Hong Kong shares also rose, despite lingering uncertainty around U.S. monetary policy, with an index tracking Chinese firms jumping roughly 2 percent on the back of money inflows from the mainland.
China’s blue-chip CSI300 index rose 0.7 percent, to 3,262.07 points by the lunch break, while the Shanghai Composite Index gained 0.6 percent, to 3,021.02 points.
The People’s Bank of China published surveys on Sunday showing business confidence among entrepreneurs in China had picked up for the second quarter in a row in 2016.
Fu Xuejun, analyst at Huarong Securities, said that despite the apparent improvement in sentiment, there was limited room for the Chinese market to go up further due to uncertainty in the economy and global liquidity situations.
“I don’t see a strong recovery in the Chinese economy, but the global liquidity situation could be more challenging,” he said, noting that a possible U.S. rate hike soon could stir global markets, bringing more volatility to domestic shares.
Investors are counting down to the Federal Reserve’s Open Market Committee meeting on Sept. 20-21, while the outcome of the Bank of Japan’s policy meeting will be on Wednesday.
But the Hong Kong market, which is more vulnerable to global market volatility, rose sharply on Monday, benefitting from continuous money flows from mainland China.
The Hang Seng index added 0.8 percent, to 23,529.37 points, while the Hong Kong China Enterprises Index gained 1.9 percent, to 9,778.71.
Chinese investors spent 2.7 billion yuan ($404.9 million) buying Hong Kong shares on Monday morning via the Shanghai-Hong Kong Stock Connect, as the recently popular cross-border channel reopened after a four-session suspension.
Hong Kong’s financial sector jumped, as China’s yield-hungry investors continue to snap up shares in the city’s listed lenders for their high dividend and low valuations.
Nuclear power-related stocks in both China and Hong Kong markets were in the spotlight, after Britain gave the go-ahead for a $24 billion Chinese-backed nuclear power plant.
Mainland-listed China Nuclear Engineering and SUFA Technology Industry Co Ltd both shot up 10 percent, the maximum allowed, while Hong Kong-listed CGN Power rose as much as 4.7 percent.