Hong Kong Stocks Rise for Third Week; Esprit, Chalco, Merchants Bank Gain

Hong Kong stocks rose, lifting the benchmark index to its third straight weekly gain, after China reported higher-than-estimated loan growth, and the European Central Bank raised its economic growth forecast.

China Merchants Bank Co., the nation’s fifth-biggest lender by market value, climbed 2.4 percent. Esprit Holdings Ltd., which got 85 percent of its fiscal 2009 sales from Europe, gained 1.6 percent on optimism the global recovery can be sustained. International Taifeng Holdings Ltd., which manufactures cotton yarns and bedding products, plunged 19 percent on its debut.

“Overall for the banking sector, they deserve a re-rating after those uncertainties of European countries, China tightening on loans and the property sector,” Liu Yang, chairwoman of Atlantis Investment Management Ltd., said in a Bloomberg Television interview. “For Chinese banks, all the negative news is in the price.”

The Hang Seng Index advanced 1.2 percent to 19,872.38 at the close, extending its gain this week to 0.5 percent. The Hang Seng China Enterprises Index of Chinese companies’ so-called H- shares climbed 1.5 percent to 11,340.38.

Concern over budget deficits in Europe and speculation China’s government will further tighten money supply have contributed to a 13 percent drop in the Hang Seng Index from its November high. Shares on the gauge are priced at an average 13.1 times estimated earnings, down from 18 times on Nov. 16, Bloomberg data show.

New Loans

Merchants Bank climbed 2.4 percent to HK$18.18. Bank of China Ltd., the nation’s third-largest lender, gained 0.8 percent to HK$3.89. Bank of Communications Co., the fourth biggest, rose 2.4 percent to HK$8.21.

Chinese banks extended 639.4 billion yuan ($93.6 billion) of new local-currency loans last month, the central bank said. That was more than the median forecast of 600 billion yuan in a Bloomberg News survey of 24 economists. In April, the amount was 774 billion yuan. M2, the broadest measure of money supply, grew 21 percent from a year earlier, the data showed.

Standard Chartered Plc. climbed 2.4 percent to HK$186.10. The U.K. lender that makes at least three quarters of its profit in Asia rose as much as 3.8 percent in its Mumbai trading debut. The bank raised $540 million from the India listing.

Esprit climbed 1.6 percent to HK$44.30. Cosco Pacific Ltd., which operates container facilities at Piraeus port, Greece’s largest, rose 3.9 percent to HK$9.15. HSBC Holdings Plc., Europe’s biggest lender, rose 1.4 percent to HK$73.10.

Casino Stocks Rally

The ECB yesterday raised its euro-region economic growth forecast for this year and cut it for 2011. The central bank expects the economy will expand around 1 percent this year compared with a previous forecast of around 0.8 percent. It will grow about 1.2 percent in 2011, lower than an earlier projection of around 1.5 percent, because of weaker domestic demand, ECB President Jean-Claude Trichet said.

Shares of casino operators advanced after Deustche Bank AG raised its annual forecast for gambling revenue in Macau, the world’s biggest betting hub. The brokerage said sales may surge 50 percent this year from its earlier forecast of 35 percent.

Sands China Ltd., Asia’s biggest casino operator by market value, rose 1.7 percent to HK$10.92. Wynn Macau Ltd. increased 3.3 percent to HK$12.56. SJM Holdings Ltd., controlled by Macau billionaire Stanley Ho, advanced 4.8 percent to HK$6.07. Melco International Development Ltd., controlled by Ho’s son Lawrence, climbed 4.6 percent to HK$3.21.

‘Top Pick’

International Taifeng plunged 19 percent to HK$1.67. The company said it sold 280 million shares at HK$2.06 each in an initial public offering, raising net proceeds of HK$445 million ($57 million).

China Gas Holdings Ltd., the supplier of the fuel to mainland homes and businesses, advanced 5.2 percent to HK$3.83. The stock was rated “buy” in new coverage by Goldman Sachs Group Inc. analyst Chris Shiu, who said the company was the top pick in China’s gas industry because of its “strong volume growth momentum, favorable customer mix and discounted valuations.”

Futures on the Hang Seng Index gained 0.8 percent to 19,848. All but one stock rose among the gauge’s 43 constituents.

To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net

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