Hong Kong Stocks Swing From Gain to Loss on China Economy
Hong Kong stocks swung between gains and losses after Premier Wen Jiabao’s called for more government support to help China’s poorest regions, while a report showed profit declined at mainland industrial companies.
China Overseas Land & Investment Ltd. (688), the biggest Chinese developer listed in Hong Kong, climbed 2.3 percent. Esprit Holdings Ltd. (330), a clothier that counts Europe as its biggest market, gained 1.8 percent as concern eased that Greece may exit the euro. Sun Hung Kai Properties Ltd. fell 1 percent after co- chairmen Raymond and Thomas Kwok reported to Hong Kong’s anti- corruption body, almost two months following their arrests in a bribery investigation.
The Hang Seng Index was little changed at 18,712.67 as of 10:54 a.m. in Hong Kong after losing as much as 0.2 percent and gaining as much as 0.4 percent. About the same number of shares rose and fell in the measure. The Hang Seng China Enterprises Index of mainland stocks added 0.1 percent to 9,545.50.
“China is a little bit of a concern, but China has policy levers,” Binay Chandgothia, a Hong Kong-based portfolio manager at Principal Global Investors, which manages $250 billion globally, said on Bloomberg Television. “They can use policy incentives to get growth back on track.”
The benchmark Hang Seng Index (HSI) is heading for an 11 percent decline this month, the most since September, on concern Europe’s debt crisis will worsen and amid signs China’s economic slowdown is deepening. Shares on the gauge traded at 9.5 times estimated earnings on average as of May 25, compared with 12.6 times for the Standard & Poor’s 500 Index and 10 times for the Stoxx Europe 600 Index.
Wen, while visiting a remote region in Hunan province, called for extra government support for the nation’s poorest areas, the official Xinhua News Agency reported yesterday. The country should speed up important infrastructure projects and improve health care services in impoverished regions, he was cited as saying.
Futures on the Hang Seng Index expiring this month added 0.4 percent to 18,629. The HSI Volatility Index (VHSI) added 0.4 percent to 28.71, indicating that traders expect swings of about 8.2 percent in the next 30 days.
The Hang Seng Index has fallen about 14 percent from this year’s peak as political uncertainties in Europe stoke concern governments will struggle to contain the region’s debt crisis. Greek opinion polls showed voters warming to parties supporting the European Union’s bailout agreement as political leaders at home and abroad warned of economic catastrophe should the single currency fragment.
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