Hong Kong Stocks Climb as China Buying Bank Shares Spurs Surge for Lenders
Hong Kong’s Hang Seng Index (HSI) rose to its highest close in almost three weeks, led by financial companies after China’s investment arm said it began buying shares in the nation’s four biggest banks.
Industrial & Commercial Bank of China (601398) Ltd., the world’s biggest lender by market value, surged 6.7 percent. Jiangxi Copper Co., China’s No. 1 producer of the metal, gained 3.1 percent after commodity prices rose. Esprit Holdings Ltd. (330), a clothier that counts Europe as its biggest market, jumped 12 percent amid growing confidence that euro-area leaders will act to stem the region’s debt crisis.
The Hang Seng Index increased 2.4 percent to 18,141.59, its highest close since Sept. 21. All but seven stocks increased on the 46-member gauge. The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong advanced 4.4 percent to 9,257.34.
“What you’re seeing is a state entity committing to raising its share of ownership, and I think that’s a very positive signal, not just for the banking sector but more broadly for the global economy,” said Philip Poole, global head of macro and investments strategy at HSBC Global Asset Management. “What’s most important for markets is to stabilize sentiment.”
The Hang Seng Index sank 21 percent this year, making it the worst performing developed-market benchmark index outside the euro zone. Shares plunged amid concern China’s tightening measures and Europe’s debt crisis will derail global growth.
Companies on the index traded at 9.7 times forecast earnings, around March 2009 levels. That compares with 12 times for the Standard & Poor’s 500 Index.
ICBC jumped 6.7 percent to HK$4.31. Agricultural Bank of China Ltd., the nation’s No. 3 lender by market value, surged 13 percent to HK$2.99. China Construction Bank Corp. (939), the second- biggest, rose 5.8 percent to HK$5.11, and Bank of China Ltd. soared 7.7 percent to HK$2.65.
China’s state-run Central Huijin Investment started buying shares in the nation’s four biggest banks yesterday and plans to continue with “related market operations,” according to a statement on its website.
Jiangxi Copper increased 3.1 percent to HK$14.74, while Minmetals Resources Ltd., a copper and alumina producer, jumped 4 percent to HK$3.11. Cnooc Ltd., China’s largest offshore oil producer, gained 3.9 percent to HK$13.72. Zijin Mining Group Co., the mainland’s largest gold producer by market value, surged 14 percent to HK$2.78.
Commodity prices advanced after German Chancellor Angela Merkel and French President Nicholas Sarkozy pledged at the weekend to deliver a plan to recapitalize the Europe’s banks and address Greece’s sovereign-debt crisis by Nov. 3.
The London Metal Exchange Index of prices for six industrial metals including copper and aluminum gained 1.7 percent yesterday, while crude oil for November delivery gained 2.9 percent.
Esprit jumped 12 percent to HK$11. Li & Fung Ltd., a supplier of clothes and toys to Wal-Mart Stores Inc., rose 6.1 percent to HK$14. Standard Chartered Plc (2888), the U.K.’s second- biggest lender by market value, increased 4.2 percent to HK$169.10.
Futures on the Standard & Poor’s 500 Index slid 0.5 percent today. In New York yesterday, the gauge rose 3.4 percent, its biggest rally since August. The Stoxx Europe 600 Index posted the biggest four-day gain since 2008 yesterday.
“I think there are a number of elements that are coming together to be more supportive for the markets,” said HSBC’s Poole. “It may not have bottomed and may just be a bear-market rally, but it strikes me that we’re getting closer to the bottom and there’s a lot of bad news that’s in the price.”
Futures on the Hang Seng Index rose 1.4 percent to 17,990. The HSI Volatility Index rose 5 percent to 38.31, indicating options traders expect a swing of 11 percent in the Hang Seng Index in the next 30 days.
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