The FTSE 100 has enjoyed a broad-based rally on the back of encouraging industrial data from China, with HSBC (HSBA) leading the way after the bank’s biggest shareholder increased its stake.
The UK blue-chip index rose 69 points, or 1.2%, to 5,912 as Chinese factory profits grew for the fourth consecutive month. Profits at manufacturing companies in China between January and August are now only 4.4% lower than reported last year as the region continues to bounce back from the Covid-19 pandemic.
Spreadex analyst Connor Campbell said markets were ‘looking for an excuse to rebound after limping to a close last week’ as European investors ‘clung onto a normally ignored piece of data’.
‘While China’s economic strides can hardly be used as proof that the decelerating recovery in Europe and the US will soon pick back up again, not least because of the surging number of Covid-19 cases, investors were more than willing to throw a Monday morning party celebrating the figures,’ he said.
HSBC jumped to the top of the FTSE 100, up 8.1% at 306.2p after the bank’s largest investor Ping An Insurance (2318.HK) raised its stake to 8%.
The vote of confidence translated into a rally in both the bank’s London and Hong Kong-listed shares, which had fallen to 25-year lows last week after HSBC was alleged to have allowed fraudsters to transfer millions of dollars around the world.
‘Shares are only back to where they were a fortnight ago – when stocks have been beaten down as much as HSBC they are often ripe for larger percentage swings as investors try to figure out what is the real value,’ said Neil Wilson, analyst at Markets.com.
UK ‘mid-cap’ companies on the FTSE 250 rose 1.2%. William Hill (WMH) tumbled to the bottom of the index, down 11.9% at 275p, giving back some of Friday’s gains after US betting giant Caesars Entertainment’s (CZR.O) £2.9bn bid for the bookmaker, at 272p per share, underwhelmed.
The shares had surged to more than 312p on Friday, after William Hill said it had received offers from both Caesars and buyout group Apollo Global Management, as investors anticipated a bidding war.
Susannah Streeter, analyst at Hargreaves Lansdown, said although William Hill’s online proposition ‘lags some of its rivals, it’s been focused on the US for some time and boasts a 29% share of the US sports betting market’.
‘Caesars clearly sees vast potential,’ she said.
Cruise ship operator Carnival (CCL) moved to the top of the mid-cap index, up 9.4%, or 86p, to £10.05 on the back of positive analyst notes. Great Portland Estates (GPOR) was up 8.9%, or 49p, at 601p after private equity group KKR bought a stake in the West End property developer.