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Hong Kong Stocks Climb as U.S. Data Tempers Fed Concern

Hong Kong stocks rose, with the city’s benchmark index advancing from its biggest weekly slump in two months, after plunging U.S. home sales tempered expectations the Federal Reserve will cut stimulus in September.

China Petroleum & Chemical Corp., also known as Sinopec, rose 1.9 percent after Asia’s biggest refiner reported higher first-half net income. Zhaojin Mining Industry Co. jumped 8 percent after gold prices topped $1,400 an ounce for the first time since June. China Shenhua Energy Co., the nation’s top coal miner by market value, climbed 3.7 percent after beating first-half earnings estimates.

The Hang Seng Index rose 0.7 percent to 22,005.32 at the close in Hong Kong, with about three shares climbing for each that dropped on the 50-member gauge. The equity benchmark posted a 2.9 percent decline last week, the most since the period ended June 21, as outflows from Asia accelerated on speculation the U.S. central bank will reduce asset purchases.

“After the correction last week, we may have a technical rebound and be firmly up,” said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. “The timetable of whether they will start the tapering of the bond-buying in the U.S. is the main focus.”

The Hang Seng Index (HSI) retreated 2.9 percent this year, the worst performer among developed markets tracked by Bloomberg. The gauge traded at 10.5 times estimated earnings, compared with 15.09 for the Standard & Poor’s 500 Index.

U.S. Homes

Futures on the S&P 500 slid 0.1 percent today. The measure rose 0.4 percent on Aug. 23 to cap its first two-day rally in three weeks, as data showed new home purchases fell in July by the most in three years. Three Fed regional bank presidents at a conference in Jackson Hole, Wyoming, differed on timing for reducing stimulus. The Fed’s first step may be to pare bond buying next month by $10 billion to a $75 billion monthly pace, according to economists surveyed by Bloomberg.

The Hang Seng China Enterprises Index, also known as the H-share index, gained 1.4 percent to 10,075.09 today. The gauge fell 18 percent from a Feb. 1 high on concern China’s growth is slowing. The measure traded at 1.21 times book value, compared with a five-year average of 1.77.

Emerging-market stocks lost more than $1 trillion since May through Aug. 23, according to data compiled by Bloomberg, after Fed chief Ben S. Bernanke said the central bank “could take a step down” in its asset purchases depending on the strength of the U.S. economic recovery.

Sinopec Earnings

Sinopec gained 1.9 percent to HK$5.83 after posting a 24 percent increase in first-half net income to 30.3 billion yuan ($4.95 billion) as its refining business returned to profit. Analysts surveyed by Bloomberg were a 31 billion-yuan gain.

The company refined 115.4 million tons, almost double what PetroChina Co. processed, as better technology led the business to a 200 million yuan profit, compared with a 18.5 billion yuan loss a year earlier. PetroChina’s (857) refining loss narrowed to 7.8 billion yuan from 23.3 billion yuan a year earlier.

Gold rallied 18 percent from a 34-month low in June as Asian demand for jewelry strengthened. Futures jumped 1.8 percent to $1,395.80 on the Comex in New York last week and spot prices topped $1,400 on Aug. 23.

Zhaojin, the mainland’s No. 2 producer of the precious metal, surged 8 percent to HK$7.00. Zijin Mining Group Co., China’s largest gold miner by market value, rose 1.6 percent to HK$1.87.

China Shenhua gained 3.7 percent to HK$25.35. The company is on course to meet its full-year guidance after “solid” first-half earnings, according to Barclays Plc. The results imply flat full-year earnings, while the coal producers peers are likely to see a drop, Barclays said.

Belle, BYD

Belle International Holdings Ltd. (1880), the nation’s largest footwear retailer, gained the most on the Hang Seng Index, rising 5.6 percent to HK$11 after closing at a seven-week low last week. The company reported first-half net income of 2.17 billion yuan after the close on Aug. 23 versus an estimated 2.2 billion yuan.

BYD Co. (1211), the Chinese automaker partly owned by Warren Buffett’s Berkshire Hathaway Inc., slumped 12 percent to HK$28.45 after predicting the smallest quarterly profit in a year. Earnings will be hurt by weaker sales of vehicles and mobile phones, the company said.

Hang Seng Index futures rose 0.9 percent to 22,009. The HSI Volatility Index gained 0.2 percent to 18.52, indicating traders expect a swing of 5.3 percent on the benchmark equity gauge over the next 30 days.

To contact the reporter on this story: Eleni Himaras in Hong Kong at ehimaras@bloomberg.net

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net

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