Hong Kong H Shares Advance, Poised to Enter Bull Market

Hong Kong stocks rose, with a gauge of Chinese shares poised to enter a bull market, before the release of data today expected to show mainland industrial output accelerated at the fastest pace this year.

The Hang Seng China Enterprises Index (HSCEI) gained 1.2 percent to 10,655.19 as of 9:38 a.m. in Hong Kong. The Hang Seng Index added 0.8 percent to 22,926.48 after yesterday erasing this year’s losses as mainland exports surged.

The Hang Seng China Enterprises Index, also known as the H-share index, rose 20 percent from a June 25 low, an advance that some traders consider a bull market. The measure traded at 1.25 times book value yesterday, compared with a five-year average of 1.77. Shares have climbed as stronger China manufacturing data prompted Goldman Sachs Group Inc. and JPMorgan Chase & Co. to lift projections for the nation’s economic growth.

The Hang Seng Index (HSI) gained 0.4 percent this year through yesterday as manufacturing data from around the world added to signs of a global recovery. The gauge traded at 10.9 times estimated earnings yesterday, compared with 15.1 for the Standard & Poor’s 500 Index.

China’s industrial output is expected to have surged 9.9 percent in August from a year earlier after a 9.7 percent gain in July, according to a Bloomberg survey. Retail sales probably expanded 13.3 percent on an annualized basis, from 13.2 percent the previous month. A report over the weekend fueled gains in global stocks after it showed Chinese exports rose more than economists expected last month.

Futures on the S&P 500 were little changed. The measure jumped 1 percent yesterday as corporate acquisitions fueled optimism in the world’s largest economy. Koch Industries Inc.’s takeover of Molex Inc. is among the latest of $160 billion of mergers and acquisitions that have been announced in the U.S. since the end of August, the most since 2007, data compiled by Bloomberg show.

West Texas Intermediate crude fell from a two-year high as President Barack Obama struggled to marshal support for a military strike against Syria. Bashar al-Assad threatened retaliation if the U.S. attacks, and Russia urged the Middle Eastern state to give up its stockpile of chemical weapons.

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

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

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