Hong Kong-listed energy companies surge

Hong Kong stocks rose for a third day as energy companies surged after OPEC agreed to a preliminary deal that will cut output for the first time in eight years. At the same time, property developers retreated.

The Hang Seng Index climbed 0.5 percent at the close. CNOOC Ltd and China Petroleum & Chemical Corp advanced at least 4 percent, while China Oilfield Services Ltd jumped the most since October, after US crude held near $47 a barrel. A gauge of real estate companies dropped 0.4 percent, led by China Resources Land Co. Hsin Chong Group Holdings Ltd plunged by a record as shares resumed trading after Anonymous Analytics rated it a "strong sell." The Shanghai Composite Index advanced 0.4 percent.

The Organization of Petroleum Exporting Countries agreed to trim production following an informal meeting in Algiers. Concern over a global glut has weighed on crude prices for at least the past two years. The Hang Seng Index has gained 14 percent this quarter, Asia's biggest advance, as mainland inflows swelled via an exchange link with Shanghai and traders scaled back bets for higher US borrowing costs. Mainland markets will be shut next week for holidays.

"In the short term oil prices will support energy stocks," said Sam Chi Yung, senior strategist at South China Financial Holdings Ltd in Hong Kong. "Since China holidays are coming up and the stock connect is closed, Hong Kong market's turnover will be slow in general."

The Hang Seng Index rose to 23,739.47, while the Hang Seng China Enterprises Index climbed 0.8 percent, extending its quarterly gain to 12 percent.

The Shanghai Composite Index has advanced just 2.4 percent in the period. Trading volume on the CSI 300 Index was 37 percent below the 30-day average for this time of day.

Net buying of Hong Kong shares through a link with Shanghai totaled 58.7 billion yuan ($8.8 billion) this month, compared with purchases of just 1.75 billion yuan in the other direction. That's helped narrow a valuation gap between dual-listed shares in Hong Kong and Chinese mainland exchanges to near the smallest since 2014. The connect is closed from today until Oct 11.

The Shanghai Composite will end the year at 3,075, according to the median forecast in a poll of 10 strategists and fund managers. That implies a 13 percent drop over the 12-month period, the steepest in five years, and a gain of 2.9 percent from Wednesday's close. Fading prospects for monetary easing, a slowing economy and the risk of higher US borrowing costs spurring yuan weakness were among the factors weighing on the nation's shares, the survey showed.

Bloomberg