Hong Kong stocks rose, with the Hang Seng Index closing at the highest level in two months, as a slowdown in China’s economic growth stoked speculation that policy makers have more room to ease monetary policy.
Jiangxi Copper Co. (358), China’s biggest producer of the metal, led gains among raw material producers on speculation demand for commodities will increase in the world’s second-largest economy. Industrial & Commercial Bank of China (601398) Ltd., the world’s No. 1 lender by market value, gained 3.9 percent. Hutchison Whampoa Ltd. (13) advanced 3.6 percent after the company was said to be close to buying Orange Austria, a mobile-phone operator part-owned by France Telecom SA.
“We could probably see a little bit more easing in China toward the middle of the year,” Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management Ltd., which oversees about $49 billion, said on Bloomberg Television. “It will be done on a gradual basis. I don’t think a quick cut in reserve-ratio requirements for banks is necessary at this stage.”
The Hang Seng Index (HSI) jumped 3.2 percent to 19,627.75, its highest close since Nov. 9. All except one share advanced in the 48-member gauge. The index rose 3.3 percent last week amid bets Europe will contain its debt crisis and China will take steps to boost growth.
China ETFs Rally
The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong surged 4.5 percent to 10,962.42, the highest since Aug. 8. China’s government said the economy expanded by 8.9 percent in the fourth quarter, the slowest pace in 10 quarters, boosting speculation the central bank will ease monetary policy.
The Hang Seng H-Share Index Exchange-Traded Fund (2828) climbed 4.5 percent, while the iShares MSCI China Index ETF advanced 2.7 percent on the highest volume since October.
“There’s a bias in China right now for more policy easing,” said Andrew Pease, Sydney-based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages $150 billion. “We are hearing China’s senior leadership is very, very concerned about the outlook in Europe.”
Mainland home sales rose in 2011 at the slowest pace in three years amid government measures to cool the housing market, according to a government report. Other government reports showed industrial output and retail sales increased at a faster rate in December compared to the previous month.
Raw material producers gained as copper advanced to the highest level in more than two months amid optimism demand will increase in China, the world’s largest metal consumer. Crude oil rose to a three-day high.
Jiangxi Copper surged 9.3 percent to HK$19.14. Aluminum Corp. of China Ltd. increased 8.1 percent to HK$3.86. Cnooc Ltd. (883), the country’s biggest offshore oil producer, gained 5.3 percent to HK$15.62. China Coal Energy Co. (1898), the No. 2 producer of the fuel, climbed 6.7 percent to HK$9.98.
Chinese lenders and developers also rallied. Agile Property Holdings Ltd. (3383), a real estate company partly owned by JPMorgan Chase & Co., jumped 9 percent to HK$8.39. Guangzhou R&F Properties Co., the No. 1 developer in the southern Chinese city, increased 5.8 percent to HK$7.09. ICBC, as China’s largest lender is known, rose 3.9 percent to HK$5.35. Agricultural Bank of China Ltd. (1288), the nation’s third-biggest lender by market value, gained 4.7 percent to HK$3.77.
Hutchison’s Austria Deal
The Hang Seng Index tumbled 20 percent last year amid concern Europe’s debt crisis was worsening and China’s steps to curb inflation would hamper economic growth. Companies in the gauge traded at 9.6 times forecast earnings at the last close, down from 14.4 times at the beginning of 2011, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index traded at 12.3 times.
Hutchison Whampoa, the operator of ports and provider of telecommunications services, rose 3.6 percent to HK$69.70. The company is finalizing a deal to buy Orange Austria for about 1.4 billion euros ($1.8 billion), including debt, according to people with knowledge of the matter.
“Given the economic environment, you’d expect certain assets in Europe will be more attractive in terms of pricing compared to six to 12 months ago,” said Adrian Lowe, an analyst at Mirae Asset Securities in Hong Kong. “It’s typical of Hutchison to consider buying when markets are considered cheap. They have a lot of cash.”
Futures on the Hang Seng Index increased 3.5 percent to 19,686. The HSI Volatility Index (VHSI) fell 3.8 percent to 22.06 today, indicating options traders expect a swing of 6.3 percent in the benchmark over the next 30 days.
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