Hong Kong stocks rose, with the benchmark index gaining the most in a week, after the U.S. services industry expanded at the fastest pace in a year and as property developers rebounded from a rout triggered by policy curbs in China.
China Overseas Land & Investment Ltd. (688), the biggest mainland real estate company traded in Hong Kong, climbed 3.3 percent. Li & Fung Ltd. (494), a supplier of toys and clothes to retailers including Wal-Mart Stores Inc., advanced 1.2 percent. Tencent Holdings Ltd. (700), China’s largest Internet company, gained 1.2 percent to a record high after being added to the FTSE China 25 Index. ZTE Corp. (000063) surged 8.9 percent after the Chinese phone-equipment manufacturer said it’s collaborating with Intel Corp. on next-generation smartphones.
The Hang Seng Index rose 1 percent to 22,777.84 at the close, its biggest gain since Feb. 28, with all but six of its 50 companies advancing. The Hang Seng China Enterprises Index of mainland companies climbed 1.7 percent to 11,359.04.
“Today there is some recovery in sectors that have been hammered down earlier,” said Alex Wong, a Hong Kong-based director at Ample Capital Ltd. Strength in U.S. markets and economic data is also helping to push Hong Kong higher, Wong said. In the mid-term, “we will probably have some downside bias. There are policy risks associated with local and China property stocks. People are still cautious.”
Hong Kong’s benchmark index in February had its first monthly decline since August as developers fell on concern China and Hong Kong will introduce more measures to curb property prices. The gauge traded at 11 times average estimated earnings yesterday, compared with 13.9 for the Standard & Poor’s 500 Index and 12.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Developers had the biggest gain among the Hang Seng Index (HSI)’s four industry groups. The property gauge on March 4 plunged the most since October 2012 after China tightened mortgage rules to cool the property market.
China Overseas Land rose 3.3 percent to HK$22.05. Guangzhou R&F Properties Ltd., a builder in the southern Chinese city, increased 2.3 percent to HK$11.78. The stock will be added to the FTSE Asia Pacific Ex-Japan Large Cap Index from March 15. Soho China Ltd. (410), the biggest developer in Beijing’s central business district, climbed 6.7 percent to HK$6.22 after underlying profit more than doubled.
Futures on the S&P 500 (SPX) gained 0.2 percent today. The Dow Jones Industrial Average climbed to a record yesterday, erasing losses from the financial crisis, as China maintained its growth target and investors bet central banks will continue stimulus measures.
The Institute for Supply Management’s non-manufacturing index, which covers about 90 percent of the U.S. economy, increased to 56 last month from 55.2 in January. Readings above 50 signal expansion in the services industry.
Federal Reserve Vice Chairman Janet Yellen said this week the U.S. central bank should press on with $85 billion in monthly bond buying while tracking possible costs and risks from the unprecedented program. The European Central Bank probably will keep its benchmark rate unchanged at its meeting this week, according to a Bloomberg survey of economists.
Li & Fung climbed 1.2 percent to HK$10.44, while Techtronic Industries Co. (669), a power-tool maker that counts the U.S. as its biggest market, increased 4.6 percent to HK$17.44.
Tencent advanced 1.2 percent to HK$278.80 to close at a record. Belle International Holdings Ltd. (1880), China’s largest footwear retailer, rose 3.6 percent to HK$15.40, the biggest gain in the Hang Seng Index. The companies were added to the FTSE China 25 Index effective March 15.
ZTE surged 8.9 percent to HK$14.14 after revealing its pact with Intel on next-generation smartphones.
China Longyuan Power Group Corp. (916), a coal producer and wind-farm operator, slumped 2.9 percent to HK$6.99 after IFR Asia reported an institutional investor plans to sell as much as HK$842 million ($109 million) of its shares. Ten block trades of 15 million shares each crossed at HK$6.96 before the market opened today.
Hang Seng Index futures rose 1 percent to 22,639. The HSI Volatility Index slid 4 percent to 15.50, indicating traders expect a swing of 4.4 percent for the equity benchmark in the next 30 days.
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