The MSCI Hong Kong Index rose for a second day, poised for a record close, as exporters advanced amid signs the U.S. economy is strengthening and investors weighed earnings. The benchmark Hang Seng Index (HSI) fluctuated.
Techtronic Industries Co. (669), a maker of power tools that gets more than 70 percent of sales from North America, advanced 4.5 percent. Brilliance China Automotive Holdings Ltd. climbed 4.5 percent after reporting a surge in profit. Biostime International Holdings Ltd. tumbled 7.6 percent after the infant-formula maker’s first-half results missed estimates.
The MSCI Hong Kong Index climbed 1.2 percent to 13,573.30 as of 1:19 p.m. in the city, heading for a record close. The Hang Seng Index added 0.1 percent to 25,150.43 after falling as much 0.3 percent. The gauge yesterday closed at its highest since May 21, 2008. The Hang Seng China Enterprises Index (HSCEI), also known as the H-share index, today slid 0.4 percent to 11,045.96.
“We are seeing an improvement in the U.S.,” said Nader Naeimi, who helps oversee about $131 billion as Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd. “U.S. growth is becoming self-sustaining. If at some point employment picks up and inflationary pressures pick up, the Fed can move on rates. Growth is strong enough to take higher rates.”
Futures on the Standard & Poor’s 500 Index slid 0.1 percent today. The U.S. equity benchmark gained 0.5 percent yesterday, closing near an all-time high, amid bets interest rates will remain near zero longer as price pressures remain subdued even as economic growth shows signs of accelerating.
Housing starts surged in July to the highest level in eight months, while U.S. inflation weakened to the slowest pace in five months, holding below the Federal Reserve’s target.
Minutes of the Fed’s July 29-30 meeting, when the stimulatory bond-buying program was reduced by $10 billion for a sixth time, will be released today. Fed Chair Janet Yellen will speak to global central bankers on Aug. 22 in Jackson Hole, Wyoming.
The H-share gauge rose 21 percent from this year’s low in March through yesterday amid speculation China will add stimulus to meet its growth goal. The index traded at 7.7 times estimated earnings at the last close compared with 11.6 for the Hang Seng Index and 16.6 on the S&P 500 (SPX) yesterday. MSCI’s Hong Kong gauge traded at 16.8 times expected profits.
“This rally can continue as valuations in Hong Kong are still pretty good compared to the rest of the region,” Ryan Huang, a strategist at IG Ltd. in Singapore, said by phone. “We’re seeing another choppy session as investors are waiting for a clear set of catalysts.”
Bank of China Ltd. fell 0.8 percent to HK$3.65. The nation’s fourth-largest lender boosted money set aside for soured loans by 116 percent to 12.7 billion yuan ($2.1 billion) in the second quarter from a year earlier after yesterday posting the slowest profit growth for five quarters amid a slowing Chinese economy. Net income rose 8.5 percent to 44.4 billion yuan.
Standard Chartered Plc slid 0.3 percent to HK$158.10. The bank agreed to pay $300 million for failing to flag suspicious transactions after promising to do so as part of a 2012 settlement with New York’s banking regulator.
To contact the reporter on this story: Jonathan Burgos in Singapore at email@example.com