China shares surge as HK-Shanghai link start date set

Investing.com - The Hang Seng index surged 2.2% Monday, leading most of the region higher, after news that a trading link between Hong Kong and Shanghai will start next week.

The Shanghai-Hong Kong Stock Connect, a highly anticipated program that was first announced in April, will begin Nov. 17. The program allows investors in both stock markets to access each others' shares, giving investors overseas access to an estimated US$2 trillion worth of mainland equities.

The news gave a boost to Chinese stocks both offshore and onshore. The Shanghai Composite Index was up 1.2%, led higher by the finance sector.

China Minsheng Banking (HK:1988) Corp. Ltd. was up 4.9%, and Bank Of China Ltd (HK:3988) Ltd. was up 3.8%.

Mainland stocks have been climbing in the months leading up to the launch, an expectations that new capital will boost undervalued stocks trading on the mainland, including consumer and healthcare names that foreign investors can't find proxies for offshore.

Earlier Monday data showed that China's consumer inflation rose 1.6% on year in October as expected, while producer price deflation eased 2.2%, more than the minus 2.0% year-on-year expected.

Investors in China were also assessing news over the weekend of faster-than-expected Chinese export growth in October, though the expansion slowed to 11.6% from September's 15.3%. The news provided a rare bright spot for an economy that continues to battle headwinds

President Xi Jinping told business leaders at the Asia-Pacific Economic Cooperation meeting on Sunday that China's economic risks are manageable and pledged to help boost growth and improve infrastructure, trade and transport links across the Asia-Pacific region.

Stocks in the rest of the region were mixed. The Nikkei 225 was down 0.8%, Australia's S&P/ASX 200 was down 0.7% and Korea's Kospi was up 1.1%.

Last week, U.S. stocks rose on Friday after a soft October jobs report left many concluding the Federal Reserve might hold off on raising interest rates until later in 2015 than once anticipated, leaving borrowing costs low while the economy continues to grow.

The Dow 30 rose 0.11%, the S&P 500 index rose 0.03%, while the NASDAQ Composite index fell 0.13%.

The Department of Labor reported earlier that the U.S. economy added 214,000 jobs in October, missing expectations for an increase of 231,000. The number of jobs added in September was revised to 256,000 from a previously estimated 248,000.

The report also revealed that the U.S. unemployment rate ticked down to 5.8% in October from 5.9% in September. Analysts had expected the unemployment rate to remain unchanged last month.

While not overwhelmingly disappointing, the less-than-stellar report did give investors room to rethink when the Federal Reserve will hike interest rates next year.

The Fed recently closed its monthly bond-buying program and is expected to raise interest rates some time in 2015, though the timing as to when next year benchmark borrowing costs may rise remains up in the air thanks to hit-or-miss U.S. data.