PetroChina Co. (857), the mainland’s biggest oil company, gained 1.3 percent after announcing a venture with Canada’s Encana Corp. (ECA) Utilities gained after China’s power consumption rose. Gome Electrical Appliances Holding Ltd. (493) jumped 7.2 percent after the Chinese retailer was rated new buy at Citigroup Inc. China Longyuan Power Group Corp. (916) slumped 5.4 percent after saying it’s selling shares to fund wind and solar projects.
The Hang Seng Index climbed 0.7 percent to 22,605.98 at the close. About three stocks advanced for each that declined, with volume 25 percent above the 30-day average for the time of day, according to data compiled by Bloomberg. The Hang Seng China Enterprises Index of mainland companies gained 1.5 percent to 11,307.42.
“China’s economy is showing signs of a recovery,” said Michiya Tomita, a Hong Kong-based fund manager at Mitsubishi UFJ Asset Management Co., which oversees $70 billion. “Hong Kong’s market has been surging, and investors may be cautious about an increase in share placements.”
The Hang Seng Index has rallied 22 percent this year through yesterday on signs of recovery in the U.S. and China, the world’s two largest economies, and as central banks took steps to stimulate global growth. The measure traded for 11.8 times estimated earnings yesterday, compared with a multiple of 13.7 for the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.
Manufacturing optimism lifted shares after a purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics showed China’s December preliminary reading was 50.9, compared with the 50.8 estimate from economists in a Bloomberg survey. November’s final reading was 50.5, the first time in 13 months it was above the expansion-contraction threshold of 50.
China’s Shanghai Composite Index (SHCOMP) gained 4.3 percent, the biggest jump since October 2009, on speculation state-backed institutions were buying shares. The Hong Kong-listed iShares FTSE China A50 Index ETF, which tracks the 50 largest mainland- listed A shares, rose 5.9 percent with volume almost double its five-day average at the time of day, according to data compiled by Bloomberg.
Ping An Insurance (Group) Co. (2318), gained 3.5 percent to HK$62.95. China should promote reform of the life insurance industry, the China Insurance Regulatory Commission said, citing Huang Hong, the regulator’s assistant chairman,
“There’s speculation that Ping An Insurance is increasing its positions in Chinese equities,” said Wu Kan, a Shanghai- based fund manager at Dazhong Insurance Co., which oversees $285 million.
AIA Group Ltd. (1299), the third-largest Asia-based insurer, rose 3.1 percent to HK$31.65, while China Life Insurance Co. advanced 2.3 percent to HK$24.05.
Futures on the S&P 500 advanced 0.5 percent today. The gauge slid 0.6 percent yesterday, snapping a six-day advance on the benchmark index, as a standoff in federal budget negotiations outweighed a decline in jobless claims and a rebound in retail sales.
PetroChina rose 1.3 percent to HK$10.90 after the company agreed to pay Encana C$1.18 billion ($1.2 billion) for a 49.9 percent stake in an Alberta shale formation.
“The deal valuation is attractive because PetroChina can extract more synergistic value from this joint venture when the firm redeploys Encana’s best practices back home to develop China’s own vast gas resources,” Gordon Kwan, head of energy research at Mirae Asset Securities HK Ltd., said in an e-mail response to questions.
Huaneng Power International Inc. (902) advanced 1.5 percent to HK$7, while China Resources Power Holdings Co. jumped 2 percent to HK$18.54. China’s electricity use rose 7.6 percent last month from a year earlier, the National Energy Administration said on its website. That’s the biggest gain since February, the data show.
Gome Electrical Appliances jumped 7.2 percent to 89 Hong Kong cents after Citigroup said the retailer’s online business may become profitable in 2014 and that more affordable housing will boost demand for appliances in China.
Among stocks that fell, China Longyuan slumped 5.4 percent to HK$5.23 after saying it’s selling 572.1 million new shares at HK$5.08 apiece, a 8.1 percent discount to yesterday’s closing price. CLP Holdings Ltd. (2), Hong Kong’s biggest electricity supplier, led the Hang Seng Index (HSI) lower yesterday after raising HK$7.6 billion ($981 million) in a share sale.
There has been 49 new share sale or rights offering announcements in Hong Kong since Oct. 22, when the Hang Seng Index first surpassed its February high this year. That compares with 35 during the same period in 2011, when the gauge closed the year at 18,434.39, according to data compiled by Bloomberg. There were 66 announcements during the comparable period in 2010, when the index surged as high as 24,964.37.
Baoxin Auto Group Ltd. slumped 4.8 percent to HK$5.90 on a Hong Kong Economic Journal report that an investor is selling 78.4 million shares in the car dealer.
Futures on the Hang Seng Index increased 0.8 percent to 22,639. The HSI Volatility Index (VHSI) declined 0.5 percent to 14.96, indicating traders expect a swing of 4.3 percent on the equity benchmark in the next 30 days.
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