Hong Kong stocks (HSI) rose for the first time in seven days after U.S. data on jobless claims and manufacturing signaled strength in the world’s largest economy, easing concern Europe’s debt crisis will damp global demand.
Yue Yuen Industrial Holdings Ltd. (551), which makes shoes for Nike Inc., rose 3.7 percent. China Overseas Land & Investment Ltd., a state developer, gained 5.5 percent after Securities Times reported banks in major cities are offering lower mortgage rates. Jiangxi Copper Co. (358), China’s biggest producer of the metal, advanced 4.1 percent after commodity prices gained.
The Hang Seng Index rose 1.4 percent to 18,285.39 at the close, paring this week’s loss to 1.6 percent. All but three stocks gained in the 48-member gauge. The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong jumped 2 percent to 9,867.41 on speculation the government will relax monetary policy and ease credit curbs.
“The U.S. economy is ending the year in a bit better shape than people had anticipated, and that is good, but Europe is obviously not,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “The European economy is heading toward recession next year, and I think it’s going to continue to weigh on markets.”
The index tumbled 21 percent this year amid slow economic growth and concern Europe will fail to contain its debt crisis. Companies in the gauge traded at 10 times forecast earnings, down from 14.4 times on Dec. 31, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index trades at 12.3 times.
U.S. Employment, Manufacturing
Yue Yuen gained 3.7 percent to HK$24.15, while Techtronic Industries Co., a maker of power tools that gets more than 70 percent of its revenue from North America, rose 3.2 percent to HK$7.53.
Futures on the S&P 500 (SPXL1) gained 0.6 percent today. The index rose 0.3 percent in New York yesterday after U.S. initial jobless claims fell by 19,000 to 366,000 last week, the lowest since May 2008. The median forecast of economists surveyed by Bloomberg News was for 390,000. Separate reports showed manufacturing in the New York and Philadelphia regions expanded more than expected in December.
The data eased concern about Europe’s debt. International Monetary Fund Managing Director Christine Lagarde said yesterday that the region’s crisis is “escalating” and cannot be resolved by one group of countries.
Developers led gains in the Hang Seng after Securities Times reported banks in Shenzhen are joining lenders in Beijing and Shanghai in offering lower mortgage rates for first-home buyers.
China Overseas Land rose 5.5 percent to HK$14.32, while China Resources Land Ltd. (1109), a state-owned developer, surged 9.1 percent to HK$13, the biggest gain in the Hang Seng.
“Investors speculate the government may cut the reserve required ratio again in the near term to boost the economy,” said Zhang Yanbin, an analyst at Zheshang Securities Co.
China announced on Nov. 30 that it will reduce the amount of cash banks must set aside as reserves for the first time since 2008 as Europe’s debt crisis threatens exports and growth.
Metal producers gained after the London Metal Exchange Index of prices for six industrial commodities including copper and aluminum rose 0.5 percent, its first gain in four days. Jiangxi Copper rose 4.1 percent to HK$17.14, while Minmetals Resources Ltd., a copper and alumina producer, advanced 4.5 percent to HK$3.27.
Futures on the Hang Seng Index rose 1.7 percent to 18,260. The HSI Volatility Index sank 8.5 percent to 26.19, indicating options traders expect a swing of 7.5 percent in the benchmark over the next 30 days.
Hosa International Ltd., a mainland sportswear maker, ended unchanged on its debut from its initial public offering price of HK$1.60, after slumping as much as 20 percent.
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