Hong Kong Stocks Rise on ECB Speculation; Developers Gain
Hong Kong stocks rose to the highest level in two months as developers gained on a ratings upgrade before a meeting today at which the European Central Bank is expected to cut interest rates to a record low.
Cosco Pacific Ltd. (1199), which operates a port in Greece, added 1.8 percent. Henderson Land Development Co. led property stocks higher after the sector was upgraded by China Construction Bank Corp. Sportswear company Li Ning (2331) Co. rose 7.3 percent after founder and Olympic gold medalist Li Ning stepped in as chief executive officer.
The Hang Seng Index (HSI) rose 0.5 percent to 19,809.13 at the close after falling as much as 0.4 percent, with 33 shares gaining on the 49-member gauge. The measure rose to its highest level since May 15. Volume was about 20 percent below the 30-day average ahead of the ECB meeting. The Hang Seng China Enterprises Index (HSCEI) of mainland companies added 0.2 percent to 9,702.91.
“The market will be relatively quiet as investors are taking a wait-and-see approach,” said Cedric Ma, Senior Investment Strategist at Convoy Asset Management Ltd. “An ECB interest cut may stimulate the market a bit but we are looking for more than an interest rate cut to buy.”
The Hang Seng benchmark index has fallen about 9 percent from this year’s peak in February amid concern economic growth is slowing in the U.S. and China as Europe’s debt crisis spreads. Companies on the gauge trade at 10.2 times estimated earnings on average through yesterday, compared with 13.1 for the Standard & Poor’s 500 Index and 10.8 for the Stoxx Europe 600 Index.
A gauge of service industries in Germany dropped to 49.9, below an estimate of 50.3, fueling concern Europe’s debt crisis may be deepening. A services measure in the U.K. fell to an eight-month low of 51.3 in June from 53.3 the month before, Markit Economics and the Chartered Institute of Purchasing and Supply said.
Stocks rose on expectation that the European Central Bank may reduce the benchmark rate 25 basis points to 0.75 percent in a policy meeting today, according to the median forecast in a Bloomberg survey of 62 economists.
Cosco Pacific gained 1.8 percent to HK$10.38. Guoco Group Ltd., a real-estate company that relies on Europe for half of its revenue, added 2.5 percent to HK$61.60.
Developers gained after China Construction Bank raised the sector to overweight from neutral. Stronger contracted sales this month were the reasoni for the upgrade, analysts Edison Bian and Peter So wrote in an investor note.
Henderson Land (12) rose 2.6 percent to HK$45.05. Wheelock & Co Ltd, a Hong Kong-based developer advanced 5.9 percent to HK$31.30.
Li Ning surged 7.3 percent to HK$5.03 after founder and Olympic gold medalist Li Ning stepped in as chief executive officer. Shares also rose after TPG Capital, one of the retailer’s shareholders, said it may boost investment if the company needs more capital.
Hang Seng Index futures declined 0.7 percent to 19,882. The HSI Volatility Index (VHSI) rose 0.3 percent to 18.59, indicating traders expect a swing of about 5.3 percent in the benchmark index during the next 30 days.
Foxconn International Holdings Ltd. (2038) retreated 1.1 percent to HK$2.68 after Vice President Terry Cheng unexpectedly resigned during the cellphone maker’s push to revive earnings. He stepped down less than a third of the way into his three-year contract, according to a company statement yesterday.
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