Hong Kong Stocks Rise 4th Day on Signs of China Stimulus
Hong Kong stocks gained, with the Hang Seng Index capping its longest rising streak since March, on signs China is boosting infrastructure investment as it seeks to spur growth in the world’s second-largest economy.
CSR Corp. (1766), a Chinese train maker, gained 4.2 percent after China boosted investment in railways for a second time in a month. Aluminum Corp. of China Ltd., the nation’s largest producer of the metal, rose 1.9 percent. Hang Lung Properties Ltd., a Hong Kong developer that derives 46 percent of its sales from the mainland, jumped 3.8 percent after reporting better than expected half-year results.
The Hang Seng Index rose 1.1 percent to 19,796.81 at the close of trading in Hong Kong, with all but nine shares gaining on the 49-member gauge. The gauge last advanced for four days in March. It and increased 1.8 percent in July, a second straight advance. The Hang Seng China Enterprises Index (HSCEI) of mainland companies added 1.6 percent to 9,674.27.
“The question is when investors get bullish,” said Khiem Do, Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management (Asia) Ltd., which oversees about $8 billion. “They are looking for a strong reason to buy back into the market. There is encouraging progress being made.”
The benchmark Hang Seng Index fell 8.7 percent from this year’s high in February through today on signs Europe’s debt crisis is worsening while growth slows in China and the U.S. The drop reduced the value of shares on the gauge to 10.4 times estimated earnings on average, compared with 13.5 for the Standard & Poor’s 500 Index and 11.2 for the Stoxx Europe 600 Index.
Equities rose after leaders in Berlin, Paris and Rome backed European Central Bank President Mario Draghi by saying they will do what’s needed to protect the euro and as China was seen boosting its infrastructure stimulus measures.
China’s Ministry of Railways, the nation’s largest corporate debt issuer, said it planned to spend 470 billion yuan ($74 billion) on railroads and bridges this year. Chinese cities may spend at least 1 trillion yuan building subways from 2010 through 2015, China Daily reported, citing Chen Xunru, a member of the Chinese People’s Political Consultative Conference.
China Railway Group Ltd. (390), the country’s biggest builder of train lines and the company with the biggest advance on the H- share index this year, gained 2.1 percent to HK$3.40. China Railway Construction Corp., builder of more than half of the mainland’s modern rail system, gained 1.3 percent to HK$6.79. CSR gained 4.2 percent to HK$5.71.
Aluminum Corp. (2600), also known as Chalco, rose 1.9 percent to HK$3.20. Glencore International Plc, the world’s largest commodities trader, gained 1.7 percent to HK$38.80. Zijin Mining Group Co., China’s biggest gold producer, advanced 2.1 percent to HK$2.49.
Hang Lung Properties rose 3.8 percent to HK$27.60. The developer reported during the midday trading break that its underlying first-half profit was HK$2.5 billion ($322 million), exceeding the median of three analysts’ estimates surveyed by Bloomberg.
Other developers rose amid signs that real-estate companies are selling commercial property at the fastest pace in at least seven years to raise cash ahead of an increase in government land sales. Sino Land Co. Ltd. (83), controlled by billionaire Robert Ng, gained 1.5 percent to HK$13.28. Henderson Land Development Co. Ltd., Hong Kong’s fourth-largest homebuilder by market value, increased 2.4 percent to HK$45.20.
Of the 25 companies on the Hang Seng Composite Index for which Bloomberg has first-half earnings estimates, an equal number of companies have missed projections as have exceeded them.
Futures on the Hang Seng Index (HSI) advanced 1.1 percent to 19,714. The HSI Volatility Index (VHSI) lost 1.2 percent to 20.69, indicating traders expect a swing of about 5.9 percent in the benchmark index during the next 30 days.
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