Hong Kong Stocks Halt Three-Day Slide on ICBC Earnings

Hong Kong stocks rose, with the city’s benchmark index headed for its advance rise in four days, as Industrial & Commercial Bank of China Ltd. paced gains among lenders on better-than-expected profit.

ICBC, the world’s largest bank by market value, rose 1.2 percent. Henderson Land Development Co. (12), controlled by billionaire Lee Shau-kee, rebounded 1.5 percent after falling to an almost six-week low on a new city property tax. Techtronic Industries Co. (669), which gets 72 percent of its sales in North America, added 1.8 percent after a report showed U.S. home prices rose. PetroChina Co. (857), the nation’s biggest oil and natural gas producer, fell 3.7 percent third-quarter profit fell to its lowest in at least five years.

The Hang Seng Index rose 0.4 percent to 21,502.52 as of 11:31 a.m. in Hong Kong, headed for a 3.2 percent gain this month. About two stocks climbed for each that fell on the 49- member gauge. The Hang Seng China Enterprises Index (HSCEI) of mainland companies advanced 0.4 percent to 10,498.08.

“Investors are positive on ICBC among banking shares, but they will keep monitoring whether the sector will see net- interest margins contract,” said Patrick Yiu, Hong Kong-based managing director at Cash Asset Management Ltd., which oversees HK$100 million ($13 million). “People think China’s economy may bottom out and it will raise valuations for Chinese stocks.”

ICBC rose 1.2 percent to HK$5.09 after reporting third- quarter net income of 62.4 billion yuan ($10 billion) that topped analysts’ estimates. The bank may earn a record 226.1 billion yuan this year, according to the average of 32 analyst projections in a Bloomberg survey, compared with 208.3 billion yuan in 2011.

Lenders Gain

Banks (HSF) accounted for 88 percent of today’s gain on the Hang Seng measure. China Construction Bank Corp., the nation’s second largest lender by assets, advanced 1.6 percent to HK$5.80.

The Hang Seng Index rose 18 percent from this year’s low on June 4 as of yesterday on speculation China’s economy may be bottoming and as central banks across the globe added stimulus to prop up growth. Hong Kong’s benchmark index traded at 11.3 times average estimated earnings today, compared with 13.5 for the Standard & Poor’s 500 Index and 12 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

With a wave of global stimulus flooding markets with liquidity and adding to the threat of asset bubbles, the city on Oct. 26 announced its first property tax targeted at overseas buyers to cool home prices. The city’s monetary authority yesterday sold its own currency for a fifth time in less than two weeks after reaching the upper limit of its peg to the U.S. dollar.

Property Stocks

The Hang Seng Property Index (HSP) gained 0.6 percent, poised for a second day advance after capping the biggest drop in seven months on Oct. 29. Henderson Land, which gets 90 percent of its revenue in Hong Kong, gained 1.5 percent to HK$53.85. New World Development Co., which generates 51 percent of its sales in the city, added 2 percent to HK$11.98.

Futures on the S&P 500 added 0.1 percent today with U.S. stock trading scheduled to resume after Hurricane Sandy swept through New York, causing two days of market closures. The S&P/Case-Shiller index of property values in 20 cities rose 2 percent in the year ended in August from a year earlier, the biggest year-to-year gain since July 2010, the group said yesterday.

Companies that do business in the U.S. rose, with Techtronic Industries adding 1.8 percent to HK$14.62. Li & Fung Ltd. (494), a supplier of toys and clothes to Wal-Mart Stores Inc., gained 0.9 percent to HK$13.

PetroChina Slides

Among stocks that fell, PetroChina slid 3.7 percent to HK$10.40, headed for the biggest drop since July 9. The world’s largest publicly traded oil producer saw net income fall 33 percent to 24.9 billion yuan due to refining losses and natural- gas import costs, the company said yesterday.

Of the 44 companies on the Hang Seng Composite Index that have reported earnings this month and for which estimates are available, 27 missed expectations, according to data compiled by Bloomberg.

The HSI Volatility Index (VHSI) dropped 4.5 percent to 15.97, indicating traders expect a 4.6 percent swing in the equity benchmark in the next 30 days. Futures on the Hang Seng Index (HSI) rose 0.2 percent to 21,518.

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

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