Hong Kong stocks rose, with the benchmark index capping its biggest three-day gain since February, amid optimism policy makers from the U.S., China and Europe will take steps to stem a global economic slowdown.
Esprit Holdings Ltd. (330), a clothier that counts Europe as its biggest market, climbed 1.3 percent. Li & Fung Ltd. (494), a supplier to Wal-Mart Stores Inc., increased 2.1 percent. China Construction Bank Corp., the nation’s second-largest lender, climbed 0.7 percent after the Chinese government signaled it will delay tighter bank capital rules.
The Hang Seng Index advanced 0.9 percent to 18,678.29 at the close, with almost twice as many stocks rising as falling in the 49-member gauge. The index gained 2.7 percent in three days, the steepest such advance since Feb. 17. The Hang Seng China Enterprises Index (HSCEI) of mainland stocks gained 0.4 percent to 9,473.46.
“There may be fatigue in being bearish,” said Yoji Takeda, who oversees $1.1 billion at RBC Investment Management (Asia) Ltd. in Hong Kong. “Stocks look very cheap because they’ve been sold down. There are signs that recent bad news is already priced into the market” and increasing hope for more measures from the European governments and easing from China.
Hong Kong’s benchmark index tumbled 15 percent through yesterday from this year’s high on Feb. 29 amid slowing growth in the U.S. and China and a deepening crisis in Europe. Shares on the Hang Seng Index traded at 9.5 times estimated earnings on average yesterday, compared with 12.6 times for the Standard & Poor’s 500 Index and 10 times for the Stoxx Europe 600 Index.
European Central Bank President Mario Draghi said officials stand ready to act as the euro region’s growth outlook worsens. Federal Reserve Vice Chairman Janet Yellen said the U.S. economy “remains vulnerable to setbacks” and may warrant additional monetary stimulus. Dennis Lockhart, president of the Fed’s Atlanta bank, said extending Operation Twist, a policy of buying longer-term bonds, is an “option on the table.”
Esprit gained 1.3 percent to HK$12.68. Cosco Pacific Ltd. (1199), which operates a port in Greece, advanced 3.6 percent to HK$9.32. Li & Fung climbed 2.1 percent to HK$14.74 and Yue Yuen Industrial Holdings Ltd., which makes shoes for Nike Inc., rose 5.5 percent to HK$24.
Chinese lenders advanced on speculation the government will delay tighter lending controls. New draft rules seek to set “reasonable” schedules for banks to meet capital targets to help “maintain appropriate credit growth,” the government said on its website yesterday, without giving a deadline for compliance. The China Banking Regulatory Commission in August said the standards would start Jan. 1, 2012.
China Construction Bank rose 0.7 percent to HK$5.50. Agricultural Bank rose as much as 2.6 percent to HK$3.22.
Wharf Holdings Ltd., a property developer, rose 4.9 percent to HK$43.05 after saying the floor area of the Ocean Terminal site that it leases from the Hong Kong government has increased.
Hang Seng Index (HSI) futures expiring this month climbed 0.1 percent to 18,520. The HSI Volatility Index (VHSI) sank 1.3 percent to 26.96, indicating traders expect a swing of about 7.7 percent in the benchmark index during the next 30 days.
“The Chinese will take action to stimulate the economy and the Americans will similarly respond with an extension of Operation Twist or more quantitative easing,” said Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “For a sustained rally, we need a period of stability where we’re not in a firefighting crisis mode.”
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