Hong Kong Shares Swing as Benchmark Trades Near 18-Month High

Hong Kong stocks swung between gains and losses after hitting an 18-month high as optimism about increasing foreign securities investments boosted Chinese shares, tempering concern about the U.S. government debt.

China Construction Bank Corp., the nation’s second-largest lender by market value, rose for a second day after a regulator said China can boost quotas for foreign securities investment. Li & Fung Ltd. (494), which supplies Wal-Mart Stores Inc. and Target Corp., dropped 2 percent after Deutsche Bank AG cut its rating on the stock. AAC Technologies Holdings Inc., a supplier of speakers to Apple Inc. lost 3.3 percent after the Nikkei newswire said iPhone production may be reduced.

The Hang Seng Index was little changed at 23,399.56 as of 11:13 a.m., after earlier falling 0.4 percent and rising 0.4 percent. The Hang Seng China Enterprises Index of mainland companies increased 0.1 percent to 12,012.97, paring a gain of as much as 0.8 percent. The Hang Seng Composite Index was little changed as about the same number of shares advanced as declined.

“Optimism on the fast pace of China’s financial market reforms to bolster domestic markets and increase access to foreign markets for locals is a continuing theme today,” said Gavin Parry, managing director of Hong Kong-based Parry International Trading Ltd. “This is being tempered with an impact on confidence over Obama’s ‘‘haywire’’ remarks for markets for a debt ceiling solution, coupled with Apple’s impact on regional supply chain names.”

Relative Value

Hong Kong’s benchmark index surged 23 percent last year as China’s economy showed signs of improvement and as central banks around the globe added stimulus. Shares on the measure traded at 11.3 times estimated earnings yesterday, compared with 13.3 for the Standard & Poor’s 500 Index and 12 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the Standard & Poor’s 500 Index slipped less than 0.1 percent today. The gauge yesterday declined 0.1 percent from near a five-year high as Apple Inc. shares slumped amid concern about iPhone sales, offsetting a rally in Dell Inc.

Among other stocks that fell, Chaowei Power Holdings Ltd., a battery maker, tumbled 7.1 percent as an investor offers to sell 150 million of its shares in the company.

The Hang Seng Volatility Index rose 1.7 percent to 14.51, indeicating options traders expect a swing of 4.2 percent in the next 30 days. Futures on the Hang Seng Index (HSI) dropped 0.2 percent to 23,349.

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net

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

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