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Hong Kong Stocks Advance, Reversing Declines; Developers Climb on Sales

Hong Kong’s Hang Seng Index rose to the highest level in more than a week, as Wharf Holdings Ltd. gained after it bought land, and China-based developers climbed after Guangzhou R&F Properties Co. said sales more than doubled.

Wharf Holdings, owner of two of Hong Kong’s largest shopping centers, surged 7.1 percent after saying it bought two plots of land in China. Guangzhou R&F Properties, the No. 1 real-estate company in the southern Chinese city, jumped 5.4 percent after contracted sales in November more than doubled. China Shenhua Energy Co., the nation’s biggest coal producer, advanced 2 percent after its parent said coal liquefaction production will increase.

“Valuations are pretty reasonable, and corporate growth outlook is still relatively strong in Hong Kong,” making the market attractive, said Alex Au, managing director of Richland Capital Management Ltd. in Hong Kong, which oversees $300 million of assets. “Property stocks in China have gone down to a low level, and some people are bargain hunting.”

The Hang Seng Index rose 1.1 percent to 23,249.80, the highest close since Nov. 22. The gauge earlier fell as much as 0.7 percent. The Hang Seng China Enterprises Index of so-called H shares of Chinese companies gained 1 percent to 12,949.85.

Wharf Holdings soared 7.1 percent to HK$55.90, the biggest gain in the Hang Seng Index, after saying it bought two plots of land in China’s Jiangsu province. The 1.12 billion yuan ($168 million) purchase will bring Wharf’s land reserve in China to more than 110 million square feet, it said.

Guangzhou R&F Properties

China-based developers rose, even amid China monetary policy tightening concerns, as Guangzhou R&F Properties said contracted sales in November jumped 103 percent to 4.4 billion yuan from a year earlier boosting optimism that other developers will also report higher sales. Guangzhou R&F Properties gained 5.4 percent to HK$10.88.

Erwin Sanft, head of China and Hong Kong research at BNP Paribas, recommended property developers in a Bloomberg Television interview, saying large companies may benefit from further fund inflows.

China Overseas Land & Investment Ltd., controlled by the nation’s construction ministry, rose 3 percent to HK$15.36, and China Resources Land Ltd., a state-controlled developer, advanced 1.9 percent to HK$14.18. Bank of China Ltd., the nation’s fourth-largest lender by market value, rose 1.4 percent to HK$4.22.

China Shenhua

China Shenhua Energy Co., a coal company, advanced 2 percent to HK$33.30 after the parent company’s technology development department said Shenhua Group Corp.’s coal liquefaction production may reach 3 million metric tons a year by 2015. Output this year is estimated at 649,000 tons this year, data on the company’s website show. Shenhua Group, the parent company, is China’s sole producer of fuels from coal.

The Hang Seng Index posted its first monthly decline in three yesterday as the threat that Europe’s debt crisis will spread and expectations China will increase interest rates overshadowed optimism about rising U.S. spending. Shares in the gauge trade at an average 14.7 times estimated earnings, compared with about 17.2 times at the start of the year.

China-based banks declined earlier as the country’s fastest manufacturing growth in seven months raised concern the government will introduce further measures to contain inflation. A measure of banks dropped as much as 0.8 percent before closing 0.8 percent higher.

China’s manufacturing accelerated in November, indicating the economy can withstand higher interest rates as price pressures escalate. The Purchasing Managers’ Index rose to 55.2 points, beating the 54.8 median estimate of 14 economists surveyed by Bloomberg News.

“The manufacturing number shows the economy is still healthy and that will give the government some confidence to push out more cooling measures,” said Deng Changrong, a strategist at Huaxi Securities Co. in Shenzhen, China. “The market will face downward pressure in the coming few months.”

More than four stocks rose for every one that fell on the 45-member Hang Seng Index. Futures on the gauge gained 1 percent to 23,265.

To contact the reporter on this story: Kana Nishizawa in Tokyo at knishizawa5@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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