Hong Kong Stocks Advance on Outlook for U.S. and Global Growth

Hong Kong stocks rose as better-than-estimated U.S. retail sales data boosted confidence in the world’s largest economy and the World Bank raised its global growth forecast.

The Hang Seng Index (HSI) advanced 0.7 percent to 22,948.51 as of 9:32 a.m. in Hong Kong. The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in the city, also known as the H-share index, jumped 0.9 percent to 10,243.08.

Futures on the Standard & Poor’s 500 Index were little changed today after the U.S. equity gauge climbed 1.1 percent yesterday. Retail sales increased 0.2 percent last month, beating the 0.1 percent median forecast of 86 economists surveyed by Bloomberg, data yesterday showed. Excluding cars, demand jumped by the most in almost a year.

The Washington-based World Bank sees the global economy expanding 3.2 percent this year, compared with a June projection of 3 percent and up from 2.4 percent in 2013. The forecast for the richest nations was raised to 2.2 percent from 2 percent. Part of the increase reflects improvement in the 18-country euro area, with the U.S. ahead of developed peers, growing twice as fast as Japan.

In China, the central bank will release December data on aggregate financing and new loans today. Money supply growth may have slowed to 13.9 percent year-on-year from 14.2 percent in November, according to the median estimate of 38 economists in a Bloomberg survey. New local-currency loans may have fallen to 570 billion yuan ($94.3 billion) last month from 624.6 billion in November.

Sustainable Growth

At least seven Chinese provinces are setting lower economic growth targets for this year than in 2013, adding to signs that expansion will slow as the government focuses on policies to sustain the economy in the long term.

Hebei, which borders Beijing in the north, set an 8 percent growth goal amid “unprecedented pressure” from air-pollution controls, according to an annual work report published yesterday in the official Hebei Daily. Last year’s target was 9 percent. Fujian in the southeast and Gansu and Ningxia in the northwest are also targeting slower expansion, state-run websites show.

The Hang Seng Index dropped 2.2 percent this year through yesterday as China’s economic data fueled concern growth is slowing. The measure traded at 10.1 times estimated earnings yesterday compared with 15.6 for the S&P 500. The H-share index slumped 6.2 percent this year through yesterday and traded at 6.7 times estimated earnings, near levels reached during China’s cash crunch in June.

Hong Kong Chief Executive Officer Leung Chun-ying will deliver his annual policy address today. The government is likely to reiterate boosting housing supply, Barclays Plc wrote in a Jan. 13 report, while Bank of America Corp. economist Chua Hak Bin said the city is likely to place more emphasis on alleviating poverty than housing and land supply issues.

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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