Hong Kong stocks rose before the New Year holiday amid low trading volumes, with the city’s benchmark index extending its annual advance as information technology and energy companies led gains.
The Hang Seng Index (HSI) climbed 0.1 percent to 23,277.63 as of 9:30 a.m. in Hong Kong, with trading volumes 37 percent below the 30-day intraday average. The gauge is on course for a 2.7 percent increase in 2013, with trading hours reduced today ahead of a holiday tomorrow. The Hang Seng China Enterprises Index of mainland shares, also known as the H-share index, added 0.2 percent to 10,792.06, set for a 5.7 percent decline this year.
China’s debt including contingent liabilities rose about 13 percent in the six months through June, based on figures published yesterday by the National Audit Office, underscoring risks to the financial system as President Xi Jinping rolls out economic reforms. Lawmakers unveiled the biggest policy shift since the 1990s last month, pledging to allow more private investment in state-controlled industries, after earlier promising to give markets a greater role in shaping the economy.
“China’s local government debt numbers were less than the market expected,” Steven Leung, a director at UOB-Kay Hian Holdings Ltd., said by phone. “The impact on the Hong Kong market will be slightly positive, but we have only half a day, so the market will not be moving too much.”
The Hang Seng Index advanced 17 percent from its June low through yesterday amid signs China’s economy is stabilizing and the U.S. recovery is gaining momentum. The gauge traded at 11.1 times estimated earnings yesterday, compared with 16.7 for the Standard & Poor’s 500 Index.
Futures on the benchmark U.S. equity index were little changed today. The gauge is on course for its biggest annual gain since 1997 as confidence in the strength of the world’s biggest economy led the Federal Reserve to announce a reduction in stimulus this month, while vowing to keep interest rates low.
Conditions are in place to keep China’s economy and markets stable, and the government will implement prudent monetary policy and maintain “appropriate liquidity,” Premier Li Keqiang said during a Dec. 27 visit to Tianjin, according statement posted on the government’s website.
Strategists predict the Hang Seng Index will reach a 5 1/2-year high next year, according to eight forecasts in a Bloomberg News survey.
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