Hong Kong Stocks Swing From Gain, Loss on Factories, Euro

Hong Kong stocks swung between gains and losses as a survey showed a slowdown at the China’s factories easing and as Moody’s downgraded Germany’s credit outlook.

China Railway Construction Corp. Ltd., builder of more than half of the nation’s rail links since 1949, rose 1.8 percent after signing 20 billion yuan in new contracts. China Railway Group Ltd., the largest construction company by total assets, rose 0.6 percent. Cnooc Ltd., China’s largest offshore oil and gas explorer fell 3.5 percent after agreeing to pay $15.1 billion for Canada’s Nexen Inc. The city’s markets were suspended this morning as a typhoon skirted the city.

The Hang Seng Index rose 0.3 percent to 19,104.91 as of 1:52 p.m. in Hong Kong, with almost as many shares dropping as gaining on the 49-member gauge. The Hang Seng China Enterprises Index (HSCEI) of mainland companies gained 0.6 percent to 9,322.74.

“The numbers are getting better,” said Cedric Ma, a Hong Kong-based senior investment strategist at Convoy Asset Management Ltd., which oversees the equivalent of $260 million. “China is taking a more aggressive expansionary approach in the second quarter. Some of the effects will be shown in the third quarter, when we will see some signs of stabilization in China.”

The benchmark Hang Seng Index fell 12 percent from this year’s high in February through yesterday on signs Europe’s debt crisis is worsening while growth slows in China and the U.S. The drop cut the value of shares on the gauge to 10 times estimated earnings on average, compared with 13.1 for the Standard & Poor’s 500 Index and 10.6 for Stoxx Europe 600 Index.

Futures on the Hang Seng Index advanced 0.5 percent to 19,091. The HSI Volatility Index (VHSI) lost 2.7 percent to 21.6, indicating traders expect a swing of about 6.2 percent in the benchmark index during the next 30 days.

To contact the reporter on this story: Patrick Boehler in Hong Kong at pboehler@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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