Hong Kong’s stocks rose as optimism the Federal Reserve will act to stimulate the world’s biggest economy pared the regional benchmark’s biggest monthly decline in almost three years.
Li & Fung Ltd. (494), a supplier of toys and clothes to Wal-Mart Stores Inc., gained 3.5 percent while Techtronic Industries Co. (669), which counts North America as the No. 1 market for its electrical products, advanced 0.7 percent. Esprit Holdings Ltd. (330), the clothing retailer that counts Europe as its biggest market, jumped 5.3 percent after German retail sales beat estimates. Sands China Ltd. (1928), a casino operator, advanced 4.1 percent after Nomura Holdings Inc. said Macau’s gambling revenue may be nearly 60 percent higher this month.
The Hang Seng Index rose 1.6 percent to 20,534.85 as of the close of trading in Hong Kong. Just four stocks fell on the 46- member gauge. The index posted a 8.5 percent decline this month amid concern the U.S. economy is slowing and Europe’s debt crisis will worsen, making it the biggest monthly loss since October 2008.
Some Federal Reserve policy makers this month favored more aggressive action to stimulate the economy and reduce unemployment, minutes of their meeting released yesterday showed.
“There are expectations that we might get further accommodative policies at the Federal Reserve meeting in late September,” said Christian Kielland, managing director of brokerage BTIG Hong Kong Ltd.
“The sentiment side has been somewhat weak, but these are not necessarily hard data. Sentiment is one thing, but it can shift very quickly. We’ve come from a very oversold position across markets globally, not only in Asia.”
The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong climbed 1.8 percent to 10,943.29, its third straight day of gains.
Futures on the Standard & Poor’s 500 Index rose 0.8 percent today. The index gained 0.2 percent in New York yesterday after the Federal Reserve indicated that officials will more fully debate their options next month at a two-day meeting that was originally scheduled to last one day. Fed officials at the August meeting discussed a range of tools, including buying more government bonds, to bolster the economy.
“The fact that Bernanke moved the meeting from a one to a two-day meeting has some people hoping that we’ll get QE3,” said BTIG’s Kielland, referring to a third round of Federal Reserve asset purchases, also known as quantitative easing.
Li & Fung advanced 3.5 percent to HK$14.04. Techtronic Industries, which receives about 73 percent of its revenue from North America, increased 0.7 percent to HK$7.41. Foxconn International Holdings Ltd. (2038), which receives 24 percent of its sales outside of China, gained 3.2 percent to HK$3.87.
The Hang Seng Index rose 0.9 percent last week, halting a four-week losing streak. Shares on the index traded at 10.9 times forecast earnings, compared with 12.1 times for the Standard & Poor’s 500 Index.
Shares extended gains after Germany’s Federal Statistics Office said today that the nation’s retail sales remained unexpectedly unchanged in July from a month earlier, when it surged the most in more than three years. That beat economists’ forecasts for a 1.5 percent decline, the median of 20 estimates in a Bloomberg News survey shows. Also in Germany, Europe’s biggest economy, a separate report showed unemployment fell in August for a 26th straight month.
Esprit, which receives 83 percent of its revenue from Europe, jumped 5.3 percent to HK$21.85, posting the biggest gain on the Hang Seng Index. (HSI) HSBC Holdings Plc (HSBA), Europe’s largest lender by market value, added 1.2 percent to HK$67.25, the biggest support to the Hang Seng Index.
Casino operators gained today after Nomura said Macau’s casino revenue likely rose a better-than-expected 57 percent in August. Revenue was likely 24.7 billion patacas ($3 billion) based on the first 28 days of August, above its estimate of 22.7 billion patacas, Nomura said.
Sands China increased 4.1 percent to HK$24.20. Rival Wynn Macau Ltd. climbed 2.9 percent to HK$25.20. SJM Holdings Ltd. (880) jumped 5.9 percent to HK$17.86.
Among other stocks that gained, Evergrande Real Estate Group Ltd. (3333), China’s second-biggest developer by sales, advanced 4.3 percent to HK$4.82 after reporting first-half underlying profit jumped 148 percent after selling more housing units.
China Railway Construction Corp., the builder of the nation’s rail link, added 1.2 percent to HK$4.14 after saying first-half net income rose 7.7 percent from a year earlier.
Of the 312 companies on the Hang Seng Composite Index that announced semi-annual net income since July 11, 153 reported positive growth while 67 posted a negative surprise, according to data compiled by Bloomberg.
Futures on the Hang Seng Index rose 1.7 percent to 20,455. The HSI Volatility Index sank 10.52 percent to 27.90, indicating options traders expect a swing of 8 percent in the Hang Seng Index in the next 30 days.
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