Hong Kong stocks rose for a fourth day on Wednesday to a fresh 22-month high, shrugging off Moody's downgrade of China's soveriegn credit rating.
Hong Kong stocks rose for a fourth day on Wednesday to a fresh 22-month high, shrugging off Moody's downgrade of China's soveriegn credit rating.
The Hang Seng index ended up 0.1 percent at 25,428.50 points, while the China Enterprises Index was unchanged at 10,390.87.
Moody's Investors Service cut China's credit ratings by one notch to A1 from Aa3, saying it expects the financial strength of the economy will erode in coming years as growth slows and debt continues to rise.
Mainland Chinese stocks fell on the news, but investors in Hong Kong were more sanguine.
"The current market euphoria is a concern for contrarians," wrote Hong Hao, head of research at BOCOM International.
"Hong Kong's risk premium is plunging to its historic lows that have foreshadowed previous crises."
Hong attributed Hong Kong's "extreme market optimism" partly to continuous inflows of mainland money "with higher risk tolerance."
Brokerage CICC estimated that mainland money flows into Hong Kong stocks would average 200-400 billion yuan ($29 billion to $ 58 billion) over the next few years, or 1-2 billion yuan each trading day, according to China Securities Journal.
Market bellwether Tencent dropped about 1 percent, taking a breather following strong gains recently.
Its market cap had reached HK$2.58 trillion ($331.23 billion), dwarfing the gross domestic product (GDP) of its birthplace Shenzhen, which stood at 1.94 trillion yuan ($281.58 billion). ($1 = 7.7891 Hong Kong dollars) ($1 = 6.8897 Chinese yuan renminbi) ($1 = 6.8903 Chinese yuan renminbi)
(This article has not been edited by DNA's editorial team and is auto-generated from an agency feed.)
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