Hong Kong stocks rose, with the benchmark index gaining the most in a week, after U.S. Federal Reserve Chairman Ben S. Bernanke said he’s prepared to do more to stimulate growth in the world’s largest economy if necessary.
HSBC Holdings Plc (5), a lender that gets a fifth of its revenue from North America, rose 1.1 percent. China Everbright International Ltd. (257), a renewable energy company, gained 8.2 percent after the brother of ousted Chinese politician Bo Xilai quit as its vice chairman. Mainland railway shares rose after Citigroup Inc. raised its rating on the stocks citing the potential for industry reform. China Unicom Hong Kong Ltd. (762) rose 4 percent after first-quarter net income rose at the mobile phone carrier.
The Hang Seng Index (HSI) rose 0.8 percent to 20,809.71 at the close, the steepest gain since April 19, with more than four stocks rising for each that fell. Volume on the measure was 25 percent below the 30-day intraday average. The Hang Seng China Enterprises Index (HSCEI) of mainland stocks increased 0.9 percent to 10,911.55.
“The fundamentals are improving,” David Gaud, a senior portfolio manager at Edmond de Rothschild Asset Management in Hong Kong, said on Bloomberg Television. “I’m definitely positive on the Asian outlook and in terms of flows, it’s just a matter of time.”
Hang Seng Rally
The benchmark Hang Seng Index rose 9.4 percent this year through yesterday on signs the U.S. recovery was picking up and as central banks from China to Japan eased monetary policy. Shares on the index traded at 10.4 times estimated earnings on average yesterday, down from 11 times when the gauge peaked in February. Stocks on the Standard & Poor’s 500 Index trade at 13.3 times estimated earnings, while the average on the Stoxx Europe 600 Index is 10.7.
Futures on the S&P 500 Index rose 0.3 percent today. The index gained 1.4 percent in New York yesterday as Bernanke said the Fed stands ready to add to stimulus if necessary even after leaving its policy unchanged and upgrading its view of the U.S. economy for this year.
Fed policy makers said they expect growth will gradually accelerate. Central bankers upgraded their forecasts for economic growth and unemployment while repeating their view that borrowing costs are likely to remain “exceptionally low” at least through late 2014.
HSBC gained 1.1 percent to HK$69.80. Li & Fung Ltd. (494), a supplier of clothes and toys to retailers that gets more than half its revenue from the U.S., rose 1.6 percent to HK$16.84, while Techtronic Industries Co. (669), maker of Ryobi power tools and Hoover vacuum cleaners, advanced 2 percent to HK$9.63.
Hang Seng Index futures expiring this month rose 0.7 percent to 20,858. The HSI Volatility Index (VHSI) slid 2.9 percent to 18.63, indicating traders expect a swing of about 5.3 percent in the benchmark index during the next 30 days.
China Everbright gained 8.2 percent to HK$3.57. The company said Li Xueming, the brother of former Politburo member Bo Xilai, stepped down as a director and vice chairman for the “best interest of the company and its shareholders.” Bo, who was suspended as Chongqing Party chief last month, has been accused of “serious violations of discipline,” the Xinhua News Agency said April 10. His wife, Gu Kailai, and an aide were put in custody for suspicion of murdering British businessman Neil Heywood.
CSR Corp. (1766), a Chinese trainmaker, gained 7.1 percent to HK$6.33 and rail builder China Railway Group Ltd. advanced 4 percent to HK$3.09. Citigroup Inc. recommended buying CSR shares and raised its rating on the Chinese railway industry to neutral from negative.
China may finally reform its rail industry, which is controlled by the Ministry of Railways, Citigroup said in a report dated yesterday. Reforms may allow large regional operators to be responsible for their own profitability, the report said.
China Unicom rose 4 percent to HK$13.54 after saying first- quarter profit rose to 1 billion yuan ($159 million), from a restated 145 million yuan a year earlier.
Among stocks that fell, BYD Co. (1211), partly owned by Warren Buffett’s Berkshire Hathaway Inc., declined 5 percent to HK$20.05 after saying first-half profit may fall as much as 95 percent because of reduced earnings from solar energy and mobile handsets.
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