Hong Kong Stocks Advance as Europe Meets on Crisis; PICC Falls
Hong Kong stocks rose for a second day, with the Hang Seng Index heading for its highest close in a week, on speculation European leaders will boost efforts to end the region’s sovereign-debt crisis.
HSBC Holdings Plc (HSBA), Europe’s largest lender by market value, advanced 2.7 percent ahead of a meeting by Euro-area finance ministers today. Belle (1880) International Holdings Ltd., a Chinese retailer of women’s shoes, jumped 8.8 percent after Barclays Bank Plc raised its rating on the stock to “overweight.” PICC Property and Casualty Co. slipped 2.5 percent after China’s biggest non-life insurer announced plans to sell shares at a discount.
“Things are moving in Europe,” David Gaud, a Hong Kong- based senior portfolio manager at Edmond de Rothschild Asset Management, said on Bloomberg Television. “Europe has the financial means to respond to this crisis. We are buying Asian equities. When I look at the valuation of the market, a lot has been priced in already. We may see further volatility in the markets.”
The Hang Seng Index gained 1.2 percent to 18,256.20 at the 4 p.m. close in Hong Kong, its highest since Nov. 18. About five shares rose for each that fell. The gauge fell 9.2 percent this month through yesterday as surging bond yields in Italy and Spain stoked concern Europe’s sovereign-debt crisis is spreading to major economies.
The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong increased 1.1 percent to 9,714.09. The measure dropped as much as 0.6 percent earlier after Goldman Sachs Group Inc. recommended clients exit a bet that Hong Kong- listed companies in China will gain amid concern over a “relatively challenging” outlook in the country.
Lenders and companies with business in Europe advanced as U.S. President Barack Obama renewed pressure on European leaders to prevent a dismantling of the single currency before euro-area finance ministers meet today to seek a resolution to the two- year-old crisis.
Agreeing on a sufficient response to Europe’s problems is of “huge importance” to the U.S., Obama told reporters after meeting yesterday with European Union President Herman Van Rompuy and European Commission President José Barroso.
HSBC gained 2.7 percent to HK$58.65. Standard Chartered Plc (STAN), the U.K. lender that gets more than half of its revenue in the Asia-Pacific region, increased 3.7 percent to HK$162. Esprit Holdings Ltd. (330), a clothier that counts Europe as its biggest market, advanced 4.6 percent to HK$10.52. Cosco Pacific Ltd. (1199), which owns a port in Greece, rose 7.8 percent to HK$9.18.
Belle surged 8.8 percent to HK$15.02. Barclays raised its rating on the company, which gets 38 percent of revenue from sportswear retailing, to “overweight” from “equal-weight,” saying the company is best-positioned to benefit from growing demand for international sportswear brands in China.
‘Bear Market Rally’
This week’s advance is a continuation of the “bear market rally” that emerged in October, said Chris Roberts, head of Asian technical strategy in Hong Kong at Mizuho Securities Asia Ltd. “Our longer-term indicators are all pretty negative right now.” The bear market for Hong Kong resumed on Nov. 18 when the moving-average convergence-divergence chart for the Hang Seng Index fell below the zero line, which is a sell signal, he said.
Among stocks (HSI) that declined, PICC dropped 2.5 percent to HK$10.14. The company said it plans to raise 5 billion yuan ($784 million) from a rights offering in Hong Kong and China to help meet capital requirements. PICC will offer one share for every 10 Hong Kong-listed shares held by stockholders at HK$5.50 each and one share for every 10 Shanghai-listed share held at 4.49 yuan each, it said.
The Hang Seng Index declined 21 percent this year, reducing its valuation to 10 times estimated earnings, compared about 14 times at the end of 2010, according to data compiled by Bloomberg.
Of the 54 companies on the Hang Seng Composite Index that reported results since Oct. 11, 20 missed analysts’ estimates, while 10 surpassed expectations, according to data (HSCI) compiled by Bloomberg News.
Hung Hing, L’Occitane
Hung Hing Printing Group Ltd. (450) slumped 7.6 percent to HK$1.59 after the maker of paper and carton boxes said net income in the six months ended Sept. 30 sank 76 percent from a year earlier amid a slowing global economic recovery and rising production costs in China.
L’Occitane International SA (973), the first French company to list in Hong Kong, sank 5.7 percent to HK$14.54 after the cosmetics maker reported first-half net income of 29 million euros ($38.6 million) compared with 30 million euros a year earlier.
Futures on the Hang Seng Index gained 1 percent to 18,206. The HSI Volatility Index declined 6 percent to 30.63, indicating options traders expect a swing of 8.8 percent in the benchmark index over the next 30 days.
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