The Hang Seng China Enterprises Index (HSCEI), also known as the H-share index, advanced 0.9 percent this week after slipping 0.2 percent to 10,340.99 at today’s close in Hong Kong. BYD Co., the Chinese automaker backed by Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), rose a fifth day after Deutsche Bank AG upgraded the stock. Prada SpA (1913) dropped 6.9 percent in Hong Kong after the Italian fashion house’s profit trailed estimates.
H-shares capped their longest stretch of weekly gains in two months after government efforts to bolster growth helped boost gauges of manufacturing in May, while stimulus announced by the European Central Bank yesterday boosted the outlook for exporters. Investors are awaiting the U.S. jobs report today and China trade figures over the weekend.
“Recent data has shown that the Chinese economy is in a recovery mode,” said Zhang Yanbing, an analyst at Zheshang Securities Co. in Shanghai. “There are more stimulus measures being rolled out slowly.”
The Shanghai Composite Index (SHCOMP) slipped 0.5 percent to close at 2,029.96, capping a 0.5 percent retreat this week. Volume on the gauge was 31 percent below the 100-day average today, according to data compiled by Bloomberg. The measure has moved less than 1 percent on a closing basis for the past 13 days, the longest such stretch since 2001. Hong Kong’s Hang Seng Index lost 0.7 percent today. The Hang Seng China AH Premium Index fell 0.4 percent.
China’s banking regulator today vowed to expand loans and cap borrowing costs, seeking to boost the supply of funds to the real economy as growth slows amid a clampdown on shadow financing. To give banks more lending capacity, the regulator may ease the ratio of loans to deposits by including some stable sources of deposits in the calculation, China Banking Regulatory Commission Vice Chairman Wang Zhaoxing said.
“The adjustment of loan-to-deposit ratio will help to boost our liquidity,” said Zeng Xianzhao, an analyst at Everbright Securities Co. “While it’s a positive step, that itself wouldn’t boost the market. We need the invisible hand to enter the market. Only then will retail investors start to follow.”
BYD climbed 1.3 percent, its highest close since May 27. Deutsche Bank raised the rating of the electric-car maker to hold from sell, saying the stock has corrected and there “appears to be some progress” in China’s charging infrastructure set-up.
Guangzhou Automobile Group Co. (2238) gained 4.9 percent and Dongfeng Motor Group Co. added 1.7 percent after UBS AG recommended the shares. China’s passenger-vehicle sales are on track to meet growth estimates for fiscal 2014, UBS wrote in a report. BYD and Guangzhou Automobile led gains on the H-share gauge for the week, each rising at least 4.3 percent.
In mainland markets, Langfang Development Co. and paper maker Guangdong Guanhao High-Tech Co. led gains on the Shanghai Composite Index today, each adding at least 8 percent.
Prada dropped 6.9 percent in Hong Kong, its biggest drop since October 2011. Net income fell 24 percent to 105.3 million euros ($143.8 million) in the first quarter, the Milan-based luxury brand reported yesterday. Analysts surveyed by Bloomberg had expected a profit of 129.7 million euros.
Anhui Conch Cement Co. (914), China’s biggest cement producer, slid 3.5 percent, leading declines on the H-share gauge. Citigroup Inc. cut its rating on the stock to neutral from buy, citing weak demand.
The ECB yesterday became the first major monetary authority to use negative deposit rates, while also improving credit access for banks that lend to business and individuals, as it seeks to spur consumption, ward off deflation and maintain growth.
The International Monetary Fund said yesterday that China should refrain from rolling out more stimulus to boost growth and continue to implement changes to curb shadow banking and local government debt.
Futures on the Standard & Poor’s 500 Index were little changed today after the gauge closed at a fresh record yesterday. U.S. employers probably added 215,000 workers to nonfarm payrolls in May after the biggest increase since the start of 2012 in the previous month, according to a Bloomberg survey of economists.