Hong Kong's Hang Seng Index Advances to Two-Year High on Fed Stimulus Plan
Hong Kong stocks rose, extending the benchmark index’s gain to its highest level in more than two years, after the Federal Reserve expanded measures to boost the U.S. economy.
HSBC Holdings Plc., which counts North America as its second-biggest market, gained 3.6 percent. Techtronic Industries Co., maker of Hoover vacuum cleaners and Ryobi power tools, jumped 7.3 percent. Sino Land Co., controlled by billionaire Robert Ng, surged 6.1 percent as Goldman Sachs Group Inc. recommended buying property developers. Evergreen International Holdings Ltd., a menswear retailer, soared 26 percent on its debut.
The Hang Seng Index climbed 1.6 percent to 24,535.63 at the close of trading, extending its gain this week to 6.2 percent. The gauge closed at its highest level since June 2008. The Hang Seng China Enterprises Index of so-called H shares of Chinese companies advanced 0.9 percent to 13,948.49.
“People perceive that the Fed’s decision will support valuations of risk assets,” said Tim Leung, who helps manage about $1.5 billion at IG Investment Ltd. in Hong Kong. “The Fed’s purchasing will allow liquidity to stay in the market, and higher liquidity will have the effect of supporting risk assets.”
HSBC, the largest bank in Europe which also receives 20 percent of its revenue from North America, climbed 3.6 percent to HK$85.50 and was the biggest contributor to the Hang Seng Index’s advance. Foxconn International Holdings Ltd., a contract maker of mobile-phones that receives about 16 percent of its revenue from the Americas, rose 1.4 percent to HK$5.94.
U.S. Federal Reserve
The Federal Reserve will buy an additional $600 billion of Treasuries through June, setting a pace of about $75 billion of purchases a month and “will adjust the program as needed,” the Fed’s Open Market Committee said in a statement in Washington. The central bank also left unchanged its pledge to keep interest rates low for an “extended period.”
Techtronic Industries jumped 7.3 percent to HK$8.70. The company had its share-price target raised to HK$11.50 from HK$8.80 by Citigroup Inc., which has a “buy” rating on the stock.
Property stocks posted the biggest gain among the Hang Seng Index’s four industry groups, with Sino Land jumping 6.1 percent to HK$18.10, the steepest gain on the Hang Seng Index. The developer is among the top picks of Goldman Sachs, which forecast “another round of strong property sales to boost developers’ performance,” according to a research report today.
New World Development Co., the Hong Kong developer controlled by billionaire Cheng Yu-tung, jumped 4.7 percent to HK$16.98. Henderson Land Development Company Ltd., the Hong Kong builder controlled by billionaire Lee Shau-kee, rose 2.2 percent to HK$58.80.
Evergreen International soared 26 percent to HK$5.80 on its first trading day after the Chinese menswear maker’s initial public offering was 1,231 times subscribed.
“Equity managers are scrambling to get exposure to Asia,” said Tey Tze Ming, a market strategist at Saxo Capital Markets Pte in Singapore. “Since the market is doing very well, the IPOs tend to be oversubscribed and a lot of that is driven by the hot flows coming into Asia with so much liquidity awash in the U.S.”
Futures on the Hang Seng Index increased 1.9 percent to 24,533. Six stocks rose for each that fell of the measure’s 45 constituents.
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