Hong Kong Stocks Advance on U.S. Jobs, Europe’s Rate Cut

Hong Kong stocks rose, with the benchmark capping its second week of gains, after the European Central Bank cut interest rates to a record low and U.S. jobless claims fell.

Esprit Holdings Ltd. (330), a clothier that counts Europe as its biggest market, rose 2.4 percent. New World Development Co., a builder controlled by billionaire Cheng Yu-tung, climbed 3.3 percent after receiving permission from Hong Kong’s bourse to list its local hotels. Dongfang Electric Corp. (1072), a maker of wind- power equipment, jumped 5.5 percent after Deutsche Bank AG recommended buying the shares.

The Hang Seng Index climbed 0.1 percent to 22,689.96 at the close, with two companies advancing for each that fell on the 50-member gauge. The index capped a 3.1 percent, two-week gain, the steepest such increase since January 4 and the first back- to-back gain since March 8.

“The Hong Kong market is trying to catch up at the moment,” said Khiem Do, Hong Kong-based head of Asian multi- asset strategy at Baring Asset Management Ltd., which manages about $51 billion. “Whether fundamentally the cut in interest rates in Europe will send money to Hong Kong, I don’t think so. It helps sentiment more than anything else.”

Trading volume on the Hang Seng Index (HSI) was 22 percent less than the 30-day intraday average. The Hang Seng China Enterprises Index (HSCEI) of mainland companies traded in the city increased 0.2 percent to 10,845.99 even after data showed the nation’s service industries expanded at a slower pace last month.

Third Worst

The Hang Seng Index lost 4.8 percent from a Jan. 30 high amid signs China’s economy is slowing as the government takes step to restrain property-price increases, making the benchmark index the third-worst performer among developed markets. The measure traded at 10.8 times estimated earnings yesterday, compared with a five-year average of 12.7 and the Standard & Poor’s 500 Index’s multiple of 14.5, according to data compiled by Bloomberg.

Futures on the Standard & Poor’s 500 Index lost 0.1 percent today. The measure advanced 0.9 percent yesterday after the ECB lowered its main refinancing rate to 0.5 percent from 0.75 percent and Labor Department figures showed the number of Americans filing claims for jobless benefits unexpectedly dropped to the lowest level in more than five years.

Esprit rose 2.4 percent to HK$10.92, while Cosco Pacific Ltd., which operates a port in Greece, climbed 0.8 percent to HK$10.20. Man Wah Holdings Ltd. (1999), a sofa maker that gets half of its sales from the U.S., increased 0.8 percent to HK$7.64.

New World Development rose 3.3 percent to HK$13.92, the biggest gain in the Hang Seng Index. The company may seek as much as $1 billion in a hospitality listing, two people with knowledge of the matter said in March. New World said it hadn’t determined how much it plans to raise through the sale.

Rating Raised

Dongfang Electric jumped 5.5 percent to HK$11.84, and Shanghai Electric Group Co. (2727), China’s biggest power-equipment maker by market value, gained 4.4 percent to HK$2.83 after Deutsche Bank raised its rating on the companies to buy from hold.

I.T Ltd. (999), a Hong Kong-based fashion retailer, surged 11 percent to HK$3.20 after its full-year sales rose 15 percent from a year earlier. The company recorded the biggest advance on the Hang Seng Composite Index, the city’s broadest equity measure.

Guangzhou R&F Properties Ltd. (2777), a builder in the southern Chinese city, gained 1 percent to HK$14.30 after its April contract sales rose 29 percent from a year earlier.

Hang Seng Index futures dropped 0.2 percent to 22,551. The HSI Volatility Index slid 3 percent to 15.26, indicating traders expect a swing of 4.4 percent for the equity benchmark in the next 30 days.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

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

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.