Most Hong Kong stocks rose as speculation earnings will recover faster than expected offset concerns that a four-month rally had made stocks expensive.
Foxconn International Holdings Ltd. (2038), the world’s No. 1 contract maker of mobile phones, surged 8.7 percent as Goldman Sachs Group Ltd. raised its forecast for the Standard & Poor’s 500 Index on stronger-than-expected profit. China Mobile Ltd. (941) slipped 2.5 percent after the South China Morning Post said the company is losing its dominance, with market share dropping to 60.8 percent last month from 78 percent in January. Chun Wo Development Holdings Ltd. (711), a Hong Kong-based construction company, declined 3.7 percent after reporting a net loss.
“The global market is going for a more bullish trend because of the optimistic economic outlook worldwide,” said Marco Mak, head of research at Tai Fook Securities Ltd. “The major concern now is that the market has gone up too fast.”
The Hang Seng Index (HSI) lost 0.64 points, or less than 0.1 percent, to close at 19,501.73. The gauge ended yesterday at its highest level since Sept. 22. The measure, which changed directions at least 19 times today, climbed as much as 0.5 percent and declined as much as 1.1 percent.
About 23 stocks advanced for every 15 that declined on the broader Hang Seng Composite Index (HSCI), which added 0.1 percent. The Hang Seng China Enterprises Index, which tracks so-called H shares (HSCEI) of Chinese companies, fell 0.88 points, or less than 0.1 percent, to 11,592.25.
The benchmark Hang Seng Index has soared 72 percent from a more than four-month low on March 9 amid speculation stimulus efforts worldwide, including 4 trillion yuan ($586 billion) of spending in China, will revive global growth. Companies on the Hang Seng trade at an average 17.2 times estimated earnings, up from 10.6 times at the beginning of this year.
Average earnings estimates for companies on the gauge are currently 16 percent below the level at the start of 2009, data compiled by Bloomberg show.
The gauge’s 14-day relative strength index, measuring how rapidly prices have advanced in a given period, spent a second day on 68 today, according to Bloomberg data. That’s close to the threshold of 70, a level that some investors view as a signal the gauge is poised to fall.
Tencent Holdings Ltd. (700), operator of China’s biggest online chat service, slid 5.6 percent to HK$100.50, halting a two-day, 16 percent rally. The stock posted the biggest drop by percentage on the Hang Seng Index. Hang Lung Properties Ltd. (101), a Hong Kong-based developer which also invests in mainland China, retreated 3.2 percent to HK$25.95, having soared 20 percent in the previous five sessions.
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Foxconn jumped 8.7 percent to HK$5.75, the sharpest gain on the Hang Seng Index. Li & Fung Ltd. (494), the biggest supplier of clothes and toys to Wal-Mart Stores Inc. and Target Corp., advanced 3.3 percent to HK$23.60.
Goldman Sachs yesterday boosted its year-end estimate for the S&P 500 to 1,060 from 940, saying improving earnings will spur the steepest second-half rally since 1982. The S&P 500 yesterday rose 1.1 percent to 951.13.
Twenty-five stocks on the 42-member Hang Seng Index advanced while 16 dropped. July futures slipped 0.3 percent to 19,520.
China Mobile slipped 2.5 percent to HK$77.10. Its rivals are eroding the dominance of the nation’s largest mobile operator by offering new third-generation handsets, the South China Morning Post said, citing the companies and analysts.
Chun Wo declined 3.7 percent to 52 Hong Kong cents after reporting a net loss of HK$119.9 million ($15.5 million) for the year ended March 31, compared with net income of HK$80.5 million a year earlier, the company said.
The following stocks rose or fell. Stock symbols are in brackets after company names.
Insurers: China Life Insurance Co. (2628) (2628 HK), the nation’s biggest insurer, added 1.8 percent to HK$33.40. Ping An Insurance (Group) Co. (2318) (2318 HK), the No. 2, advanced 1 percent to HK$66.15. Goldman Sachs raised its share-price estimates for China Life by 13 percent to HK$36, and Ping An by 15 percent to HK$75.
Golden Eagle Retail Group Ltd. (3308) (3308 HK), which operates department stores in mainland China, jumped 13 percent to HK$10 after Morgan Stanley raised its recommendation on the stock to “overweight” from “equal-weight.” The bank raised its rating on the Chinese department store industry to “attractive” from “in-line,” citing a stronger economic outlook and improving industry fundamentals.
Tidetime Sun (Group) Ltd. (307) (307 HK), a media operator, soared 23 percent to 11.4 Hong Kong cents, after reporting net income of HK$1.94 million for the year ended March 31, compared with a net loss of HK$722,000 a year earlier.
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