Hong Kong stocks climbed as Chinese banks advanced after Morgan Stanley upgraded the sector to “equalweight” saying China may hold off further tightening measures.
Industrial & Commercial Bank of China Ltd., the country’s biggest lender, rose 2.5 percent. Citic Pacific Ltd., an arm of China’s biggest state-owned investment company, climbed 2.2 percent after Morgan Stanley forecast “positive” earnings for the company. Li & Fung Ltd., the world’s biggest supplier for retailers including Wal-Mart Stores Inc., gained 1.6 percent after saying it has $1 billion to buy other companies and achieve its sales goal.
“There are buying opportunities in the market but investors should not rush in,” said Terrace Chum, who helps manage about $6 billion at MFC Global Investment Management in Hong Kong. “China may still do some tightening of policy. We may have passed the peak of its intensity.”
The Hang Seng Index gained 1.2 percent to 19,944.94 at the close, after falling as much as 0.2 percent.
The Hang Seng China Enterprises Index, which tracks the so-called H shares of Hong Kong-listed Chinese companies, rose 1.7 percent to 11,426.18.
Shares on the benchmark Hang Seng Index are priced at an average 13.1 times estimated earnings, down from 18 times on Nov. 16, when the index closed at its highest level for 2009, according to Bloomberg data. Concern over budget deficits in Europe and speculation China’s government will tighten money supply have contributed to a 13 percent drop in the Hang Seng from its November high.
ICBC, as the world’s biggest bank by market value is known, climbed 2.5 percent to HK$5.75. China Construction Bank Corp., the nation’s second-biggest lender, rose 1.3 percent to HK$6.29. Bank of China Ltd., the country’s third-biggest lender, gained 1.8 percent to HK$3.99.
Morgan Stanley upgraded Chinese banks to “equal-weight” from “underweight” on speculation policy makers may hold off on further tightening.
“Uncertainties in the global economic outlook could have weakened Beijing’s decisiveness to cool the internal heat of the economy, and might have already put further tightening efforts on hold,” analysts led by Jerry Lou wrote in a report. “Banks’ non-performing loans issues are more likely to unwind in two years in this new scenario. Value is emerging.”
Citic Pacific Estimate
Citic Pacific climbed 2.2 percent to HK$13.72. Morgan Stanley forecast “upward earnings revisions” for the company, according to a research report today. The brokerage kept its “overweight” rating on the stock even though it cut the share- price estimate to HK$21 from HK$23 to reflect an increase in capital expenditure for the company’s iron ore project in Australia, the report said.
Li & Fung gained 1.6 percent to HK$35.25. President Bruce Rockowitz said the company has $1 billion to fund acquisitions after raising $400 million from a bond sale earlier this month. Purchases and a new supply contract from Wal-Mart will help the company achieve its sales target of $20 billion this year.
Imagi International Holdings Ltd. rallied 14 percent to 40 Hong Kong cents after the maker of the “Astro Boy” animated movie appointed Francis Leung Pak To as chairman and non-executive director. The company said yesterday Phoon Chiong Kit has resigned as chief executive officer, an executive director and deputy chairman “to pursue other business commitments.”
China Railway Group Ltd. gained 3.6 percent to HK$4.95. The railroad builder said it won 69.2 billion yuan ($10 billion) of new contracts, equal to 20 percent of 2009 revenue, including railroad projects in China and a $95.8 million order for a bridge in Morocco.
Futures on the benchmark Hang Seng Index gained 0.9 percent to 19,809. Three stocks gained for each that fell on the 43- member gauge.