Hong Kong Stocks Head for Six-Week Gain on Manufacturing

Hong Kong stocks rose, with the benchmark index heading for its longest weekly winning streak since October, on signs of strength in global manufacturing.

The Hang Seng Index (HSI) gained 0.8 percent to 22,262.37 as of 9:31 a.m. in Hong Kong, heading for a 1.3 percent weekly gain and a six-week advance. The Hang Seng China Enterprises Index of mainland companies added 0.9 percent to 9,809.62.

The Hang Seng Index fell 2.5 percent this year through yesterday, the worst performance among developed markets tracked by Bloomberg, as growth weakened in China and on concern the Federal Reserve will taper stimulus in the U.S. The gauge traded at 10.5 times estimated earnings yesterday, compared with 15.5 for the Standard & Poor’s 500 Index.

Futures on the S&P 500 climbed 0.1 percent today. The equity gauge surged 1.3 percent in New York yesterday, topping 1,700 for the first time after U.S. manufacturing expanded at the fastest pace in two years. Initial claims for U.S. unemployment last week fell to the lowest since since January 2008, the Labor Department said yesterday. Data today may show the jobless rate fell to 7.5 percent from 7.6 percent, according to Bloomberg surveys.

The European Central Bank said it would keep rates low and that the worst was over for the region. Euro-area manufacturing expanded at a faster pace than initially estimated in July as industry resumed growth after two years of contraction amid increasing signs the economy is pulling out of a record-long recession.

China Shares

The Hang Seng China Enterprises Index, also known as the H-share index, has fallen as much as 27 percent from a Feb. 1 high, meeting some investors’ definition of a bear market. The measure traded at 1.17 times the value of net assets yesterday, 34 percent lower than its five-year average of 1.77.

Materials and energy companies led declines this year on the Hang Seng Composite Index through yesterday on concern demand will weaken as China’s economy slows. Information technology and utilities’ shares were the biggest gainers.

Hang Seng Index futures rose 1 percent to 22,226. The HSI Volatility Index fell 2 percent to 16.89, indicating traders expect a swing of 4.8 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

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