Hong Kong stocks advanced, with the Hang Seng Index (HSI) posting its biggest weekly gain since the start of December, as U.S. initial jobless claims and European borrowing costs declined.
Li & Fung Ltd., a supplier of toys and clothes to Wal-Mart Stores Inc., climbed 1.8 percent. HSBC Holdings Plc (HSBA), Europe’s biggest bank by market value, climbed 3.7 percent. Li Ning Co. jumped 8.5 percent on speculation the sportswear company will turn around after being linked to equity fund TPG Capital. Winsway Coking Coal Holdings Ltd. (1733) sank 5.6 percent after denying fraud allegations.
The Hang Seng Index rose 0.8 percent to 20,110.37 at the close of trading. For the week, the gauge advanced 4.7 percent, its biggest gain since the five-day period ended Dec. 2. China’s markets will shut next week for Lunar New Year.
“Everyone is breathing a collective sigh of relief as European bond yields come down,” said Angus Gluskie, who oversees about $300 million at White Funds Management in Sydney. “The U.S. economic data is another bright spot that’s adding to the market momentum.”
The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong edged up 0.1 percent to 11,123.74 even after a Chinese purchasing managers’ index signaled manufacturing may contract for a third month.
Futures on the Hang Seng Index advanced 1.1 percent to 20,187. The HSI Volatility Index fell 2.4 percent to 21.81 today, indicating options traders expect a swing of 6.3 percent in the benchmark over the next 30 days.
The Hang Seng Index tumbled 20 percent last year amid concern China would continue to curb lending and Europe would fail to resolve its debt crisis. Companies in the gauge traded at 10.1 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 trades at 12.6 times.
Futures on the Standard & Poor’s 500 Index slipped 0.2 percent today. The gauge advanced 0.5 percent in New York yesterday after Bank of America Corp. reported a profit, boosting optimism about earnings. A government report showed applications for unemployment insurance payments plunged by 50,000 to 352,000 in the week ended Jan. 14, the lowest level since April 2008 and less than economists estimated.
Li & Fung
European stocks gained yesterday for a fourth day, extending a five-month high for the Stoxx Europe 600 Index, after Spanish yields fell. The nation sold 6.61 billion euros ($8.57 billion) of bonds yesterday, beating its target of 4.5 billion euros.
HSBC added 3.7 percent to HK$64.55, gaining the most on the Hang Seng Index. Esprit Holdings Ltd., which depends on Europe for most of its sales, 1.6 percent to HK$ 11.38.
Li Ning surged 6.9 percent to HK$7.18. The clothier, which has said it faced flat order growth and rising costs, sold 750 million yuan ($119 million) of convertible bonds to TPG Capital and Singapore’s sovereign wealth fund.
“It’s positive news for the company,” said Forrest Chan, an analyst at CCB International. “TPG has a good reputation to help turning around retailers.”
Li Ning said it will use proceeds from the bond sale on new stores and product development.
Winsway Coking, which processes and transports coal to China from Mongolia, fell 5.8 percent to HK$1.80. The stock slumped 8.6 percent yesterday after short-seller Jonestown Research said the company inflated its shipment numbers. Winsway denied the allegations and said the report may not have come from a “reputable” source.
Shares of Sino-Forest Ltd. plunged last year after short- seller Carson Block’s Muddy Waters LLC alleged the plantation operator overstated the size of its lumber holdings.
Luk Fook Holdings International Ltd. (590) tumbled 7.9 percent to HK$29.80. The Hong Kong-based jewelry retailer is seeking $125 million in a share sale to finance expansion and purchase inventory, according to a term sheet obtained by Bloomberg News.
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