Hong Kong Stocks Rise on China Construction Bank Earnings

Hong Kong stocks rose, with a gauge of Chinese shares extending its biggest weekly gain since November. China Construction Bank Corp. gave the biggest boost to the market after beating profit estimates.

The Hang Seng Index (HSI) added 0.4 percent to 22,146.39 as of 9:38 a.m. in Hong Kong. The Hang Seng China Enterprises Index (HSCEI), also known as the H-share index, rose 0.6 percent to 10,064.50. The gauge rebounded 8.7 percent through last week since entering a bear market on March 20 as weaker economic data fueled optimism China would act to stabilize growth.

The H-share gauge rose 6.1 percent last week. The benchmark Hang Seng Index is down 5.3 percent this year through March 28, the second-worst performer among developed markets, amid signs of a slowdown in the mainland economy. The measure traded at 10.1 times estimated earnings at the end of last week, compared with 15.9 for the Standard & Poor’s 500 Index.

Intime Retail Group Co. surged 9.1 percent after the supermarket operater said it will receive an investment of about $692 million from Alibaba Group Holding Ltd.

China is expected to roll out specific growth-supportive policies, analysts led by Lu Ting at Bank of America Corp. wrote in a note dated March 28 after Premier Li Keqiang said the nation can’t ignore “difficulties and risks” from increasing downward pressure. The official expansion target for this year is 7.5 percent, although investment banks including Goldman Sachs Group Inc. and UBS AG have projected lower growth.

China Yields

China’s short-term bond yields are sliding at the fastest pace in five years as speculation builds that monetary policy will be loosened. The yield on the government’s two-year bonds tumbled 93 basis points this quarter to 3.41 percent, ChinaBond data show.

Futures on the S&P 500 rose 0.4 percent. The gauge gained 0.5 percent on March 28 as consumer shares rebounded amid data showing household purchases rose in February by the most in three months.

China Construction Bank (939), the nation’s second-largest lender by market value, rose after posting fourth-quarter profit that climbed 9 percent to 38.2 billion yuan ($6.1 billion) from a year earlier, based on full-year figures it released yesterday. That compared with the 36.9 billion yuan average estimate of 25 analysts surveyed by Bloomberg.

Cnooc Drops

Cnooc Ltd. (883), China’s biggest offshore oil and natural gas explorer, plunged after reporting net income fell 11 percent to 56.5 billion yuan last year from 63.7 billion yuan in 2012 amid higher costs and lower crude prices. The energy company said it will increase capital expenditure 31 percent in 2014.

China is expected to report tomorrow that its manufacturing Purchasing Managers’ Index slid to 50.1 in March from 50.2 the previous month, according to the median estimate in a Bloomberg News survey. HSBC Holdings Plc and Markit Economics Ltd. are also scheduled to release final data on factory activity for the month after preliminary figures showed a third month of contraction. Readings above 50 signal expansion.

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

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net Jim Powell, Tom Redmond

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