STOCKS edged higher yesterday, as investors returning from the 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 0.75 percent, to 3,263.12 points at the close, while the Shanghai Composite Index gained 0.77 percent, to 3,026.05 points.

    The People’s Bank of China published surveys 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 today and tomorrow, while the outcome of the Bank of Japan’s policy meeting will be out tomorrow.

    But the Hong Kong market, which is more vulnerable to global market volatility, rose sharply yesterday, benefitting from continuous money flows from the mainland.

    The Hang Seng index added 0.92 percent, to 23,550.45 points, while the Hong Kong China Enterprises Index gained 1.58 percent, to 9,747.75.

    Mainland investors spent 2.7 billion yuan (US$404.9 million) buying Hong Kong shares yesterday morning via the Shanghai-Hong Kong Stock Connect, as the recently popular cross-border channel reopened after a four-session suspension.

    “Mainland buying will probably continue in following months as concerns about a weaker yuan is rising,” said Chen Hao, a strategist at KGI Securities in Shanghai. “Low valuations of Hong Kong stocks also make them a preferred target by global investors.”

    Hong Kong’s financial sector jumped. Nuclear power-related stocks in both mainland and Hong Kong markets were in the spotlight.(SD-Agencies)