Hong Kong stocks rose, with the benchmark index jumping the most in two weeks, after former Treasury Secretary Lawrence Summers withdrew his name from consideration as chairman of the Federal Reserve.
Man Wah Holdings Ltd. (1999), a sofa maker that gets half its sales from the U.S., climbed 1.8 percent. Cosco Pacific Ltd., the container-terminal arm of the largest mainland shipping group, increased 2.1 percent after people with knowledge of the matter said China’s Shanghai trade zone will open this month. Macau-related companies jumped after the city’s legislative assembly election yesterday.
The Hang Seng Index gained 1.5 percent to 23,252.41 at the close in Hong Kong, its biggest advance since Sept. 2 and the highest close since May. All but three stocks climbed on the 50-member gauge. The Hang Seng China Enterprises Index (HSCEI), also known as the H-share index, increased 1.6 percent to 10,706.63.
Summers, a former Treasury secretary, would have tightened Fed policy more than Janet Yellen, who was his main rival to replace Chairman Ben S. Bernanke, according to a Bloomberg Global Poll last week. Bernanke’s term ends Jan. 31.
“It clears up the leadership race for the Fed chairmanship,” said Tim Leung, who helps manage about $1.5 billion at IG Investment Ltd. in Hong Kong. “Vice Chairman Yellen is now most likely the lead runner to succeed Bernanke. That probably means continuing current policy, and the market generally favors continuity than uncertainty.”
The H-share index entered a bull market last week after rebounding more than 20 percent from a June low, while the Hang Seng Index (HSI) erased its 2013 loss. Stocks climbed as China’s data including exports, factory output and retail sales showed the world’s second-biggest economy is strengthening. Hong Kong’s equity benchmark traded at 11.1 times estimated earnings today, compared with a multiple of 15.3 for the Standard & Poor’s 500 Index on Sept. 13.
Bank of America Merrill Lynch last week joined Goldman Sachs Group Inc., JPMorgan Chase & Co. and Deutsche Bank AG in raising predictions for expansion in China. The government has defended its target of 7.5 percent annual growth.
Futures on the S&P 500 jumped 1.2 percent today after Summers withdrew his name from consideration to be the Fed chairman, saying it would hurt the nation for him to go forward with what would be a contentious confirmation before the U.S. Senate. His announcement came before a two-day policy meeting starting tomorrow at which the central bank is forecast to reduce monthly bond purchases.
Man Wah rose 1.8 percent to HK$11.64, while Techtronic Industries Co. (669), a maker of power tools that gets 73 percent of sales from North America, jumped 3.3 percent to HK$20.
An opening ceremony for a Shanghai free-trade zone to test economic reforms is planned for this month, with Chinese Premier Li Keqiang set to officiate, two people with knowledge of the matter said. The event may be on a day from Sept. 27 to Sept. 29, depending on Li’s schedule, said the people, who asked not to be identified because they weren’t authorized to speak publicly about the matter.
Cosco Pacific rose 2.1 percent to HK$11.80, while port operator China Merchants Holdings International Co. (144) advanced 3 percent to HK$27.90. China’s plan for a free trade zone in Shanghai is “very positive” and will help improve the country’s competitiveness, World Bank President Jim Yong Kim said at a briefing in Shanghai yesterday.
Galaxy Entertainment Group Ltd. (27), the casino operator controlled by billionaire Lui Che-woo, jumped 5.7 percent to a record high, while Sands China Ltd. (1928), a unit of billionaire Sheldon Adelson’s Las Vegas company, climbed 3.2 percent to HK$47.75, leading the Hang Seng Index higher. Melco Crown Entertainment Ltd. (6883), the Macau venture between Australian billionaire James Packer and a son of casino mogul Stanley Ho, increased 4.8 percent to HK$83.55.
Macau’s Electoral Affairs Committee for the legislative assembly election today announced its preliminary results of the election yesterday. There were 151,881 ballots recording a voting rate of 55 percent for the direct election for 14 of 33 lawmakers, it said.
“The Legislative council election in Macau was done yesterday and Macau stocks are responding very well to that,” said Jackson Wong, vice president of Hong Kong-based brokerage Tanrich Securities Co. “Since the legislative body was elected investors perceive it as more stable atmosphere in Macau.”
Brilliance China Automotive Holdings Ltd. (1114), a partner of Bayerische Motoren Werke AG, climbed 5.5 percent to HK$11.96, while Great Wall Motor Co. (2333), a Chinese maker of sport utility vehicles and pickup trucks, gained 3.7 percent to HK$43.25. Data from the China Association of Automobile Manufacturers showed the country’s sales of sports utility vehicles climbed 46 percent from a year earlier while production advanced 43 percent.
Futures on the Hong Kong gauge rose 1.7 percent to 23,326. The HSI Volatility Index rose 0.5 percent to 16.80, indicating traders expect the benchmark equity index to swing 4.8 percent in the next 30 days.
“I do think Hong Kong and China are definitely benefiting from Summers’ withdrawal because now investors are expecting the Fed won’t taper as aggressively,” said Wong. “Some of the funds would flow back to Hong Kong and China because of improved economic data from China.”
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