China Coal Energy Co. (1898), the nation’s second-largest producer of the fuel, jumped 4.7 percent after preliminary data showed unexpected expansion in China’s factory activity. Jiangxi Copper Co., the country’s largest supplier of the metal, rose 1.5 percent. Hong Kong & China Gas Co. (3), which pipes gas to households and industry in the city and the mainland, dropped 2.9 percent after posting lower profit.
The Hang Seng Index (HSI) added 0.4 percent to 21,895.40 at the close, erasing losses of as much as 1.3 percent. The equity benchmark dropped 3.2 percent in the past five days as emerging-market outflows accelerated on signs the U.S. will start reducing bond buying next month.
“Improving economic data is providing a little bit of a boost, particularly for commodity stocks,” said Marco Li, Hong Kong-based money manager at Manulife Asset Management, which oversees about $238 billion. “The period of August and September is always very jittery for the market. With the prospect of Fed tapering, capital flows are going to be more scarce so investors will have to be selective.”
Fed officials were “comfortable” with Chairman Ben S. Bernanke’s plan to start reducing bond buying this year should the economy improve, minutes of their July meeting showed. Global stocks have been whipsawed since May, when Bernanke indicated policy makers could begin tapering should the job market continue to strengthen.
The Hang Seng China Enterprises Index, also known as the H-share index, climbed 1.1 percent to 9,967.77 today after falling as much as 1.5 percent. The gauge dropped 18 percent from a Feb. 1 high through today as China’s growth slowed. The index traded at 1.2 times book value, compared with a five-year average of 1.8.
HSBC Holdings Plc and Markit Economics’ flash purchasing managers’ index of preliminary China manufacturing data unexpectedly rose to 50.1 for August, from 47.7 in July. That compares with a 48.2 median estimate by 16 analysts surveyed by Bloomberg. A reading above 50 indicates expansion.
Mainland factory activity has showed signs of expansion after Premier Li Keqiang rolled out measures to support growth, including tax breaks for small businesses and an increase in railway investment. China will reach the government’s 7.5 percent growth target this year and maintain that pace in 2014, according to a Bloomberg News survey.
Germany’s preliminary manufacturing PMI increased to 52 this month from 50.7 in July, Markit Economics said today, beating the 51.1 estimate of analysts surveyed by Bloomberg.
The Hang Seng Index retreated 3.4 percent this year, the worst performer among developed markets tracked by Bloomberg. The gauge traded at 10.5 times estimated earnings today, compared with 14.9 for the Standard & Poor’s 500 Index yesterday.
“We’re going to see further weakness in the market,” said Andrew Sullivan, director of sales trading at Maybank Kim Eng Holdings Ltd. in Hong Kong. “There are lots of things weighing on the market apart from the Fed tapering. The fact that the PMI came in over 50 should have been encouraging but there will still be concerns on Chinese data until we see a continuing increasing trend.”
Futures on the S&P 500 gained 0.4 percent today. The gauge lost 0.6 percent yesterday after the release of the Fed minutes pointed to a likely reduction in stimulus. Officials will begin to curtail bond buying next month, according to 65 percent of economists surveyed by Bloomberg from Aug. 9-13. Global central bankers are meeting this week in Jackson Hole, Wyoming, to discuss the global economy and monetary policy.
Raw material producers posted the biggest advance among the 11 industry groups on the Hang Seng Composite Index, according to data compiled by Bloomberg.
China Coal jumped 4.7 percent to HK$4.90. China Shenhua Energy Co. (1088), the nation’s biggest producer of the fuel, gained 2.3 percent to HK$24.15. Jiangxi Copper rose 1.5 percent to HK$15.24.
Li & Fung Ltd. (494), a supplier of toys and clothes to retailers including Wal-Mart Stores Inc., climbed 2.9 percent to HK$12. The company said it will start distributing Kent & Curwin men’s apparel in the U.S.
ZTE Corp. (763), China’s second-largest maker of equipment for phone networks, gained 1.4 percent to HK$1 after reporting first-half net income increased 27 percent from a year earlier to 310 million yuan ($51 million).
Hong Kong & China Gas dropped 2.9 percent to HK$18.60. First-half net profit fell to HK$3.6 billion from HK$4.1 billion ($528.7 million) a year earlier, the company said yesterday.
The HSI Volatility Index dropped 2.5 percent to 18.82, retreating from a one-month high, indicating traders expect the equity benchmark to swing 5.4 percent in the next 30 days.
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