Hong Kong Stocks Rebound on China Exports, U.S. Jobs Data

Hong Kong stocks climbed, with the benchmark index erasing last week’s decline, after China exports beat estimates and U.S. payrolls climbed.

Dongfeng Motor Group Co. gained 4.9 percent after partner Nissan Motor Co. restarted construction of a factory in China. Techtronic Industries Co. (669), a power-tool maker that get most its sales from North America, rose 1.4 percent. Cosco Pacific Ltd., the container-terminal arm of the largest mainland shipping group, climbed 2.4 percent to lead gains on Hong Kong’s equity benchmark.

The Hang Seng Index rose 0.7 percent to 23,117.47 at the close in Hong Kong after falling 0.6 percent last week. Trading volume was 17 percent lower than the 30-day average today. The Hang Seng China Enterprises Index (HSCEI), also known as the H-share index, added 0.6 percent to 10,406.79.

“China’s export numbers were better than expected and the U.S. economy is still doing well, which helps overall optimism for the market,” said Francis Lun, the Hong Kong-based chief executive officer at Geo Securities Ltd. “The pace of growth has been slowing in China, but recent figures show things are ok.”

The Hang Seng Index (HSI) climbed 9.1 percent from this year’s low in March, buoyed by signs of a manufacturing recovery and measures from China’s government to counter an economic slowdown. The equity gauge traded at 10.8 times estimated earnings today, compared with 7.2 for the H-share index and 16.5 for Standard & Poor’s 500 Index at the end of last week.

China Trade

China’s exports gained 7 percent from a year earlier, an official report over the weekend showed, topping the median estimate of 6.7 percent in a Bloomberg News survey of analysts. Imports fell 1.6 percent, a drop that wasn’t forecast by any of the 42 economists in a Bloomberg survey that projected a 6 percent gain. The trade surplus widened to $35.9 billion.

Futures on the S&P 500 lost 0.1 percent today. The underlying gauge climbed 0.5 percent on June 6, extending its record after the better-than-forecast data showed payrolls pushed past their pre-recession peak for the first time in May. The 217,000 advance in hiring was broad-based and followed a 282,000 gain in April, figures from the Labor Department showed.

Techtronic advanced 1.4 percent to HK$24.60. Yue Yuen Industrial Holdings Ltd. (551), a shoemaker that gets about 30 percent of its revenue from the U.S., added 0.8 percent to HK$24.45.

China should make an across-the-board reserve requirement ratio cut and expand the money supply to match economic growth, according to a commentary in the China Securities Journal. Concern about containing a property bubble is fading, it said.

Reserve Requirements

The commentary follows China’s announcement it will cut the reserve requirement ratio for banks that service the nation’s rural borrowers and smaller companies. Such targeted cuts would spur an additional 1.5 percent to 1.8 percent in loan growth, Deutsche Bank AG wrote in a report.

China Shipping Development Co., a Shanghai-based commodities transporter, jumped 6.6 percent to HK$4.83 after UBS AG upgraded the stock to buy from neutral. The Baltic Dry Index, a gauge of commodity shipping rates, will average 1,850 in the second half versus 1,231 year-to-date, UBS wrote in a note.

Cosco Pacific climbed 2.4 percent to HK$10.92. China Cosco Holdings Co., the nation’s biggest cargo line, advanced 3.6 percent to HK$3.17. China Rongsheng Heavy Industries Group Holdings Ltd. (1101), a shipbuilder, soared 9.3 percent to HK$1.77.

Dongfeng Motor surged rose 4.9 percent to HK$12.82. Nissan’s Infiniti brand has restarted construction of a plant in northeastern China a delay amid rising Sino-Japanese tensions. The factory will take up to 14 months to complete and will have an initial annual production capacity of at least 100,000 vehicles, according to Lu Feng, head of the legal and securities affairs department at Dongfeng Motor.

Great Wall

Great Wall Motor Co. (2333) declined 6.1 percent to HK$30.60 after reporting May vehicle sales of 51,837 units, compared with 59,273 units the previous month. The sport-utility vehicle maker’s soft sales trend may continue until the release of its Haval H2 model, Barclays Plc said.

Casino operators declined after Deutsche Bank cut this year’s Macau gaming revenue growth estimate to 12 percent from 15 percent on lower VIP revenue, while Morgan Stanley said companies could report their first quarter-on-quarter profit drop in four years. Galaxy Entertainment Group Ltd. (27), dropped 2.4 percent to HK$56.80.

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

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