Hong Kong Stocks Rise on China FDI, Bernanke; AAC Plunges

Hong Kong stocks advanced, with the benchmark index gaining a third day, after foreign investment in China rose and ahead of Federal Reserve Chairman Ben S. Bernanke’s policy report. AAC Technologies Holdings Inc. slumped on a possible delay of Apple Inc.’s iPhone 5S.

China Shenhua Energy Co. (1088), the nation’s biggest coal miner by market value, surged 6.5 percent after revenue rose last month. Luk Fook Holdings International Ltd. added 2.2 percent after the jeweller’s same-store sales grew and gold traded near a three-week high. AAC Technologies, which supplies speakers for Apple smartphones, dropped 4.6 percent.

The Hang Seng Index added 0.7 percent to 21,458.81 as of 10:44 a.m. in Hong Kong, with more than four shares rising for each that fell. Trading volume was 37 percent lower than the 30-day intraday average. The Hang Seng China Enterprises Index of mainland shares climbed 1.5 percent to 9,556.99.

“The market is still waiting for major policy news from China but so far the growth rate isn’t that bad so I don’t think there will be significant changes in the short term,” said Ben Kwong, chief operating officer at brokerage KGI Asia Ltd. “If you look at recent market sentiment and investor risk appetite, people are less fearful of Fed tapering as they tend to believe it’s the result of a stronger U.S. economy.”

The Hang Seng Index has rebounded 2.5 percent through yesterday, after posting its biggest monthly decline in a year in June, on speculation China may act to ease a deepening slowdown. The government this week reported 7.5 percent economic growth in the second quarter, down from 7.7 percent in the first three months of the year, as factory output weakened.

China FDI

China’s foreign direct investment rose 20 percent in June to $14.4 billion, the Ministry of Commerce said today. The monthly total was the highest in data going back to 1997 and the largest increase in more than two years.

Shares on the benchmark Hang Seng Index (HSI) traded at 10.1 times estimated earnings yesterday, compared with 15.2 times for the Standard & Poor’s 500 Index and 13.2 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Chinese Premier Li Keqiang yesterday said the nation will seek to keep economic growth, employment and inflation within limits, avoiding “wide fluctuations,” without elaborating on what the government deems acceptable.

Deutsche Bank AG co-Chief Executive Officer Anshu Jain said efforts to bolster China’s domestic consumption to boost the nation’s economic growth poses risks.

“It’s the right strategy for them in the long run,” Jain said in an interview with Bloomberg Television’s Haslinda Amin today in Singapore. “If there is something to watch closely in China, it would be the implications of that shift from infrastructure spending.”

Fed Expectations

Futures on the S&P 500 were little changed today. The index dropped 0.4 percent yesterday as Coca-Cola Co.’s profit dropped and after Fed Bank of Kansas City President Esther George said the U.S. was on the “right path” for recovery and that cuts in the pace of stimulus are “appropriate.”

Ben S. Bernanke bolstered the rally last week after he backed sustained monetary easing. The central bank chairman will deliver his semi-annual monetary policy report to Congress starting today.

Hang Seng Index futures climbed 0.7 percent to 21,411. The HSI Volatility Index slid 3.4 percent to 19.67, indicating traders expect a swing of 5.6 percent for the equity benchmark in the next 30 days.

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

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

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