Hong Kong Stocks Cap Weekly Gain as China Mobile Advance

Hong Kong stocks advanced, with the city’s benchmark index briefly topping 25,000 for the first time in six years, as lenders rose and China Mobile (941) Ltd. led gains.

Department-store operator Parkson Retail Group Ltd. jumped 13 percent after first-half profit beat estimates. HSBC Holdings Plc, Europe’s biggest bank, added 1.3 percent. China Mobile, the world’s largest phone company by users, surged 5.8 percent after saying it will cut $2 billion in device subsidies. Zoomlion Heavy Industry Science & Technology Co., a construction machinery maker, was suspended from trading today pending an announcement related to inside information.

The Hang Seng Index (HSI) climbed 0.6 percent to 24,954.94 at the close in Hong Kong after rising above 25,000 for the first time since May 2008. The gauge rose 2.6 percent on the week. Volume today was 17 percent lower than the 30-day average. The Hang Seng China Enterprises Index (HSCEI), also known as the H-share index, climbed 0.3 percent to 11,103.92.

“Investors are still optimistic about the Hong Kong market, and current valuations limit the downside,” said Mari Oshidari, a Hong Kong-based strategist at Okasan Securities Group Inc. “Chinese data this week trailed estimates, but investors feel comfortable because they know the government can roll out stimulus measures if the economy worsens.”

Stimulus Speculation

The H-share gauge rose 21 percent from this year’s low in March and traded at 7.7 times estimated earnings compared with 11.5 for the Hang Seng Index and 16.4 on the Standard & Poor’s 500 Index (SPX) yesterday. Chinese data from new credit to industrial output released this week was weaker than expected, boosting speculation policy makers would act to prop up growth.

China probably won’t make an across-the-board cut to interest rates or reserve requirement ratios in the second-half, according to a front-page commentary on China Securities Journal by reporter Ren Xiao. The central bank will instead rely on targeted rate cuts for shantytown redevelopment, the agriculture sector and small companies, the commentary said.

Parkson Retail (3368) surged 13 percent to HK$2.73. The company’s first-half profit of 252.9 million yuan ($41.1 million) exceeded the 226 million-yuan estimate of analysts surveyed by Bloomberg.

China Mobile climbed 5.8 percent to HK$93.40. Credit Suisse Group AG and Barclays Plc boosted ratings on the stock after the company announced the device subsidy cut amid reports regulators were said to tell mobile carriers to lower marketing expenses.

Banks Rally

HSBC rose 1.3 percent to HK$83.90, while China Construction Bank Corp. (939), the nation’s second-largest lender by market value, gained 0.5 percent to HK$5.91. The stock provided the biggest boost to the Hang Seng Index after China Mobile.

Lenovo Group Ltd., the world’s largest maker of personal computers, climbed 2.7 percent to HK$11.56 as it rebounded from yesterday’s loss.

Gold-producers Zijin Mining Group Co. and Zhaojin Mining Industry Co. (1818) are among companies scheduled to report earnings today.

Futures on the S&P 500 rose 0.1 percent today. The U.S. benchmark index climbed 0.4 percent yesterday as speculation the crisis in Ukraine won’t escalate outweighed weaker-than-estimated employment data.

Russia proposed a cease-fire for humanitarian aid deliveries to war-torn parts of southeastern Ukraine as a convoy of aid trucks from Moscow waited near the border with rebel-held areas. Even as Russia struck a conciliatory note, journalists at news outlets including Novoye Vremya and Hromadske TV reported seeing armored personnel vehicles crossing into Ukraine.

Hong Kong will report after the close of markets today that second-quarter gross domestic product rose 2.5 percent from a year earlier, holding steady from the first three months of 2014, according to analyst estimates. Hang Seng Indexes Co. is expected to announce its quarterly review of index constituents after trading ends.

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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