Hong Kong Stocks Gain for Second Day; Cheung Kong, Sinopec Rise

Hong Kong stocks gained for a second day as oil-related shares climbed after China raised gasoline and diesel prices. Cheung Kong (Holdings) Ltd. rose on a potential spinoff of a real-estate-investment trust.

China Petroleum & Chemical Corp., the nation’s biggest oil refiner, advanced 2.4 percent. Cheung Kong, Hong Kong’s No. 2 developer by market value, rose 3.5 percent after people with knowledge of the matter said Chairman Li Ka-shing plans to spin off a mainland REIT. China Construction Bank Corp. led mainland banks lower as concern grew that China’s monetary tightening will hurt lenders’ profitability.

The Hang Seng Index climbed 0.2 percent to close at 23,045.19. The Hang Seng China Enterprises Index of so-called H shares of Chinese companies was little changed at 12,611.30.

“H shares are the best investment haven,” Liu Yang, chairwoman of Atlantis Investment Management Ltd., told Bloomberg Television. “I expect a better, brighter market in which investors can make good money in the second part of next year, when fundamentals become really to be recognized by real long-term investors.”

The Hang Seng Index has recovered 21 percent from this year’s low on May 25 on speculation that growth in corporate earnings will overcome concerns about the pace of the U.S. economic recovery and China’s steps to curb rising property prices. Shares in the gauge trade at an average 14.5 times estimated earnings, compared with 12.7 times on May 25.

The China Banking Regulatory Commission may require lenders to assign 100 percent risk weightings for loans fully covered by cash flow, up from the current 50 percent, and as much as 300 percent for uncovered loans, Barclays Capital said in a note today, citing a China Business News report published yesterday. The risk-weighting rule has already been made official, the note said, citing unidentified banks.

Construction Bank fell 1 percent to HK$6.91. Industrial & Commercial Bank of China Ltd., the nation’s biggest bank by market value, slid 0.9 percent to HK$5.72.

Agricultural Bank of China Ltd., China’s largest lender to farmers, declined 0.5 percent to HK$4.03. The bank will be hurt most by the change in risk-weighting requirements, according to the Barclays note.

Gasoline Prices

China Petroleum, or Sinopec, advanced 2.4 percent to HK$7.39. PetroChina Co., the nation’s second-largest oil refiner, gained 0.3 percent to HK$9.94.

China raised gasoline and diesel prices today. The price of gasoline will increase by as much as 4 percent to 310 yuan ($47) a metric ton and diesel by 300 yuan a ton, the National Development and Reform Commission said.

Cheung Kong rose 3.5 percent to HK$120.40. Li hired Citic Securities International Co. to lead the sale of more than 10 billion yuan ($1.5 billion) of shares in a REIT backed by the Oriental Plaza development in Beijing, said one of the people, who declined to be identified. The initial share sale, which may be Hong Kong’s first to be denominated in yuan, may happen in the first half of next year, the people said.

China Resources Enterprise Ltd. climbed 3.5 percent to HK$32.20. The Chinese government-backed partner of SABMiller Plc received approval from shareholders to lend money to its parent and unlisted affiliates, Chief Financial Officer Frank Lai said.

Bosideng International Holdings Ltd., a maker of apparel products, jumped 7.1 percent to HK$3.30 after Goldman Sachs Group Inc. lifted the rating on the stock to “buy” from “neutral.”

Almost three stocks advanced for each that fell among the 45 constituents of the Hang Seng Index. Its futures rose 0.6 percent to 23,098.

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

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

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