Hong Kong Stocks Extend Weekly Gain on U.S. Economic Data

Hong Kong stocks rose, with the benchmark index capping a two-week advance, after U.S. unemployment slid to an almost six-year low, as Chinese property shares and casino operators advanced.

China Resources Land Ltd. (1109), the second-biggest mainland developer listed in the city by market value, rose 3.3 percent after AllianceBernstein Holding LP said Chinese real estate risk was exaggerated. Galaxy Entertainment Group Ltd. (27) advanced 2.6 percent after HSBC Holdings Plc recommended the casino operator’s shares. Cnooc Ltd. was the biggest drag on the benchmark index after the offshore energy explorer was downgraded at Credit Suisse Group AG.

The Hang Seng Index (HSI) rose 0.1 percent to 23,546.36 at the close after falling as much as 0.1 percent. The gauge gained 1.4 percent for the week, its biggest such advance in seven weeks. Volume today was 23 percent below the 30-day average. The Hang Seng China Enterprises Index, also known as the H-share index, added 0.3 percent to 10,489.56.

“The stronger U.S. economy is outweighing investors’ concerns about rising interest rates,” said Louis Wong, a Hong Kong-based fund manager at Phillip Capital Management. “It’s a holiday in the U.S., so that’s limiting investors’ enthusiasm to get into the market. There’s still some profit-taking pressure for Hong Kong after its strong gain on Wednesday.”

Futures on the S&P 500 fell 0.1 percent. The measure advanced 0.6 percent in shortened trading yesterday to a record after jobs growth beat estimates and unemployment fell to 6.1 percent, the lowest since September 2008. U.S. markets are shut today for the Independence Day holiday.

Tightening Outlook

The sustained recovery in the labor market is prompting Wall Street economists to bring forward estimates for when the Federal Reserve will start raising benchmark interest rates.

Official data this week showed China’s factory activity accelerated at the fastest pace this year in June. A services purchasing managers’ index released by HSBC Holdings Plc and Markit Ltd. yesterday reached the highest since March 2013.

The H-share gauge pared this year’s drop to 3 percent as the government rolled out targeted stimulus including reserve ratio cuts to counter the slowdown. The measure traded at 7.3 times estimated earnings, compared with 10.9 for the Hang Seng Index and 16.7 for the Standard & Poor’s 500 Index yesterday.

Chinese developers climbed after AllianceBernstein said it didn’t see strong evidence of a widespread property market bubble on the mainland. Barclays Plc said government easing of housing curbs will boost shares in the sector.

China Resources Land rose 3.3 percent to HK$15.16. Shimao Property Holdings Ltd., a mainland developer controlled by billionaire Hui Wing Mau, jumped 5.4 percent to HK$16.54. Guangzhou R&F Properties Co. (2777), a builder in the southern Chinese city, rose 2.7 percent to HK$10.50.

Casino Shares

Galaxy Entertainment, the casino operator controlled by billionaire Lui Che-woo, rose 2.6 percent to HK$66.45. HSBC raised its rating on the stock to overweight from neutral on gains in market share and its strong long-term outlook, saying Macau gaming stocks are still under-owned. Sands China Ltd. (1928) increased 2.4 percent to HK$61.15.

Among companies that debuted today on the Hong Kong bourse, Kangda International Environmental Co. (6136) rose 15 percent to HK$3.21. Herbal-drink maker Hung Fook Tong Group Holdings Ltd. surged 32 percent from its initial public offering price to HK$1.71.

Hong Kong’s May retail sales by volume slid 4.7 percent from a year earlier, exceeding economists’ median estimate for a 3.8 percent drop, while sales by value declined 4.1 percent, the city’s government said on its website yesterday.

Cnooc (883) dropped 2.6 percent to HK$13.68. Credit Suisse cut the energy explorer’s equity rating to underperform from neutral, and reduced its target price to HK$11 from HK$12.60.

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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