Hong Kong stocks rose, with the city’s benchmark index extending a four-week high, on optimism the Federal Reserve will delay cutting stimulus. Tencent Holdings Ltd. (700) jumped after industry bellwether Google Inc.’s ad sales beat estimates.
Man Wah Holdings Ltd. (1999), a sofa maker that gets half its sales from the U.S., rose 7.1 percent after saying it expects higher profit. Hutchison Whampoa Ltd. (13), controlled by Hong Kong billionaire Li Ka-shing, slumped 1.1 percent after scrapping the sale of its ParknShop supermarket chain. Tencent, China’s biggest Internet company, extended its record high.
The Hang Seng Index gained 0.4 percent to 23,438.15 at the close in Hong Kong, adding to last week’s 0.5 percent gain after U.S. lawmakers ended the impasse over the debt ceiling. About two shares rose for each that fell on the 50-member equity gauge, with volume that was 27 percent lower than the 30-day intraday average. The Hang Seng China Enterprises Index (HSCEI), also known as the H-share index, added 0.2 percent to 10,668.20.
“The overall market remains firm, especially after the debt problem in the U.S. was resolved,” said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. “The Hong Kong market may trend higher. There’s a chance for a delay in Fed tapering but I don’t think reduced stimulus is really bad news because it points to a U.S. recovery.”
Futures on the Standard & Poor’s 500 Index rose 0.1 percent. The equity gauge climbed 0.7 percent on Oct. 18 to cap its biggest weekly gain since July as third-quarter results from Google topped estimates and as speculation grew the Fed will further delay cutting bond purchases.
The September U.S. jobs report, originally scheduled to be released Oct. 4, will be issued tomorrow after being pushed back by the partial shutdown. Delayed economic data will prevent Fed policy makers from paring asset buying until their March 18-19 meeting, according to the median of 40 responses by economists in a survey conducted by Bloomberg last week.
Man Wah surged 7.1 percent to HK$13.26 after saying it sees first-half profit to double from a year earlier on sales growth. The company is expected to post its first-half earnings on Nov. 13. Li & Fung Ltd. (494), a supplier of toys and clothes that gets most its revenue from the U.S., rose 0.9 percent to HK$10.88.
Information technology companies led gains on the Hang Seng Composite Index after Google’s third-quarter results beat expectations on higher sales volume and Barclays Plc said it expected mainland Internet companies to post strong third-quarter results. Tencent jumped 4.2 percent to HK$447.80. Software-maker Kingsoft Corp. (3888) gained 7.3 percent to HK$22.90, leading the gauge of IT stocks higher.
The Hang Seng Index climbed 18 percent from this year’s low in June as data showed China’s economic expansion is stabilizing after a two-quarter slowdown. Hong Kong’s equity benchmark traded at 11.2 times estimated earnings, compared with 15.8 for the S&P 500 on Oct. 18.
China’s government called for “unrelenting” implementation of its policies and reforms to improve the quality of growth. While the economy is “stable and trending for the better,” and the nation has the ability to achieve this year’s targets, the foundations of the rebound are “not yet firm,” the State Council said after an Oct. 18 meeting led by Premier Li Keqiang.
China’s gross domestic product expanded 7.8 percent in the third quarter from a year earlier, the National Bureau of Statistics reported in Beijing last week. The official growth target for this year is 7.5 percent.
Drug-distributor Sinopharm Group Co. (1099) jumped 7.4 percent to HK$23.35. China aims to promote health services, the State Council said last week, with incentives such as increasing land supply for health service industry and subsidies to private medical institutions.
Brilliance China Automotive Holdings Ltd. (1114), a partner of Bayerische Motoren Werke AG, jumped 4.7 percent to HK$13.28 to lead carmakers higher. Daiwa Securities Group Inc. in a report dated Oct. 18 reaffirmed its positive rating on China’s auto sector, which it expects to rally further this quarter.
Sands China Ltd. (1928), a unit of billionaire Sheldon Adelson’s Las Vegas casino company, rose a second day to climb 2.9 percent to HK$59.70. Shares surged on Oct. 18 after third-quarter profit surged. Galaxy Entertainment Group Ltd. (27), controlled by billionaire Lui Che-woo, gained 4.6 percent to HK$62.55, leading gains on the Hang Seng Index (HSI) today.
Among stocks that fell, Hutchison Whampoa slumped 1.1 percent to HK$95.75. After scrapping plans to sell its ParknShop supermarket chain, the company said it’s considering selling shares in its A.S. Watson Group retailing unit in what would be Asia’s biggest initial public offering in three years.
Glorious Property Holdings Ltd. (845) suspended trading in Hong Kong pending the release of a possible plan by controlling shareholder Zhang Zhirong to take the mainland developer private.
Futures on the Hang Seng Index rose 0.4 percent to 23,401. The Hang Seng Volatility Index dropped 2 percent to 14.93, indicating traders expect the benchmark equity index to swing 4.3 percent in the next 30 days.
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