Hong Kong's Hang Seng Index Gains in Longest Winning Streak Since November

Hong Kong stocks rose, driving the Hang Seng Index to its longest winning streak in two months, after an expansion in U.S. manufacturing fueled optimism in a global economic recovery.

Li & Fung Ltd., the biggest supplier to Wal-Mart Stores Inc., advanced 4.9 percent. China Overseas Land & Investment Ltd., a state-controlled developer, gained 3.7 percent after a report said the nation may delay a property tax. China Coal Energy Co. led coal producers higher on speculation a supply disruption in Australia will lead to higher prices of the fuel.

The Hang Seng Index rose 1 percent to 23,668.48, to the highest close since Nov. 16. It has climbed for five straight days, gaining 4.6 percent in its longest winning streak since the six days ended Nov. 8. The Hang Seng China Enterprises Index of so-called H shares of Chinese companies increased 1 percent to 13,016.37.

“The market looks promising for the first half of this year as investors speculate on a U.S. economic recovery,” said Castor Pang, Hong Kong-based research director at Cinda International Holdings Ltd. “We may even see the whole of January on a rising trend, but the Hang Seng Index’s gain is likely to be capped at around 28,000 this year. Uncertainties could become more obvious after mid-year if the economy doesn’t expand as much.”

The Hang Seng Index extended its 2010 gain after China announced Jan. 1 its manufacturing grew at the weakest pace in three months in December, signaling the government’s efforts to rein in inflation may be working and easing concern that further measures will be needed.

Relative Valuations

Shares in the gauge traded at an average 12.7 times estimated earnings at yesterday’s close, less than the 14.9 times for both the MSCI Asia Pacific Index and the Standard & Poor’s 500 Index.

Li & Fung jumped 4.9 percent to HK$49.05. Cosco Pacific Ltd., a container-terminal operator, gained 4.5 percent to HK$14.50. Foxconn International Holdings Ltd., the world’s biggest contract maker of mobile phones, rose 3.3 percent to HK$5.89.

Manufacturing in the U.S. expanded in December at the fastest pace in seven months. The Institute for Supply Management’s index climbed to 57 last month. A reading greater than 50 points to expansion.

China Coal, the nation’s second-largest producer of the fuel, climbed 3.4 percent to HK$12.88. Yanzhou Coal Mining Co., the No. 3, rose 3.1 percent to HK$25.30. China Shenhua Energy Co., the biggest, increased 2.9 percent to HK$34.15.

Property Stocks Climb

Rains and floods in Australia’s Queensland state are disrupting global supplies of steelmaking coal, with 37 percent of the world’s traded production affected by force majeure, according to Macquarie Group Ltd.

Property stocks led gains among the four industry groups in the Hang Seng Index. China Overseas Land advanced 3.7 percent to HK$15.18. China Resources Land Ltd., also a state-controlled developer, rose 3 percent to HK$14.90.

China may delay a residential-property tax because of disputes among government departments, the Century Weekly magazine reported, citing an unidentified person close to the Ministry of Finance and state tax bureau.

Maanshan Iron & Steel Co., a Chinese steelmaker, gained 5.7 percent to HK$4.45 after Credit Suisse Group AG raised its rating on the stock to “outperform” from “neutral.”

China National Materials Co., which provides cement-making equipment and engineering services, surged 8.9 percent to HK$7.10. Credit Suisse rated the stock “outperform” in new coverage.

HKR Soars

HKR International Ltd., a real-estate developer, soared 25 percent to HK$5.25 after Nomura Holdings Inc. rated the stock “buy” in new coverage.

Cathay Pacific Airways Ltd., Hong Kong’s biggest carrier, advanced 3 percent to HK$22.40 after its Chief Operating Officer John Slosar said the company is “reasonably confident” about 2011.

Almost eight stocks advanced for each that fell among the 45 constituents of the Hang Seng Index. Its futures climbed 1.2 percent to 23,670.

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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