Most Hong Kong Stocks Advance on Chinese Economy Speculation

Most Hong Kong stocks rose, lifting the Hang Seng Index (HSI) to its longest winning streak in 13 months, amid speculation economic growth in China can weather measures to curb Chinese property prices and Europe’s debt crisis.

China Resources Enterprise Ltd., which receives 87 percent of its sales from mainland China, climbed 2.1 percent after a gauge of leading indicators for the Chinese economy rose. Esprit Holdings Ltd. (330), which gets 85 percent of its revenue from Europe, lost 3.3 percent after Moody’s Investors Service cut Greece’s credit rating to non-investment grade. Tencent Holdings Ltd. (700) sank 3.1 percent after the company’s chairman reduced his stake.

The Hang Seng Index added 0.1 percent to 20,062.15 at the close of trading, with five stocks advancing for every three that dropped. The gauge has climbed 3.5 percent in the past six days, the longest series of gains since the seven trading days to May 8, 2009. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies’ so-called H-shares added 0.3 percent to 11,556.45.

“Growth is holding up pretty well,” said Binay Chandgothia, who oversees about $2.2 billion as chief investment officer at Principal Global Investors (Hong Kong). “The biggest concern is how countries in Europe can control their deficits without sacrificing too much by way of growth.”

The Hang Seng Index slumped 6.4 percent last month, the most since January. Concerns over budget deficits in Europe and speculation China’s government will further tighten money supply have contributed to a 13 percent drop in the stock gauge from its November high. Shares on the measure are priced at an average 13.2 times estimated earnings, down from 18 times on Nov. 16, data compiled by Bloomberg show.

‘Sharp’ Increase

China-related stocks advanced as the Conference Board said an indicator for the Chinese economy, the world’s third biggest, rose “sharply” in April. The measure gained 1.7 percent to 147.1, compared with a revised 1.2 percent increase in March, the New York-based research organization said today.

China Resources climbed 2.1 percent to HK$28.70. Industrial & Commercial Bank of China Ltd. rose 0.7 percent to HK$5.79. China Construction Bank Corp., the world’s second-largest lender by market value, advanced 0.6 percent to HK$6.30.

Futures on the Hang Seng Index expiring in June increased 0.3 percent to 20,145. The gauge turned between gains and losses at least 19 times today as investor sentiment wavered between optimism for Chinese growth and concerns over Europe debt.

Suncorp Technologies Ltd. (1063), a Hong Kong-based maker and seller of telephone equipment surged 18 percent to 19.6 Hong Kong cents after the company said it may buy Top Match Holdings Ltd., which holds a 50-year right to operate a fiber optic network in China.

Greece’s Debt Rating

Stocks in the U.S. fell yesterday, with the Standard & Poor’s 500 Index (SPX) slipping 0.2 percent after Moody’s cut Greece’s credit rating by four levels to Ba1 from A3. Moody’s cited “substantial” risks to economic growth from the austerity measures tied to a 110 billion-euro ($134 billion) aid package from the European Union and the International Monetary Fund.

Esprit slumped 3.1 percent to HK$45.25 following a 8.6 percent surge in the past three days.

“The markets had a run up in the last few days and were probably looking for a reason to correct,” said Principal’s Chandgothia.

Tencent declined 3.1 percent to HK$127.40, the second-biggest drop in the Hang Seng Index after Esprit. Chairman Ma Huateng lowered his stake in the Chinese Internet company to 11.2 percent from 11.47 percent, according to a filing with the Hong Kong stock exchange.

China Lilang Ltd. (1234), owner of China’s biggest men’s clothing brand, tumbled 8.3 percent to HK$8.62. Ming Lang Investments Ltd., China Lilang’s second-biggest investor, agreed to sell 80 million shares for HK$8.50 each, reducing its stake to 5.71 percent from 12.38 percent, Lilang said.

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net.

To contact the editor responsible for this story: Darren Boey in Tokyo at dboey@bloomberg.net.

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