Hong Kong stocks jumped, with the Hang Seng Index gaining the most in two years, as companies reported improved earnings and rising U.S. retail sales boosted confidence demand is growing in the world’s largest economy.
PICC Property & Casualty Co., China’s biggest non-life insurer by market value, surged 10 percent and China Resources Cement Holdings Ltd., a maker of the building material, gained 8.6 percent after both reported first-half profit rose. Li & Fung Ltd., a supplier of toys and clothes to retailers including Wal-Mart Stores Inc., increased 7.6 percent.
The Hang Seng Index gained 3.3 percent to 20,260.10, its biggest gain since July 2009. Almost 10 stocks rose for each that fell on the 46-member gauge. The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong advanced 4.7 percent to 10,944.17.
“Data from the U.S. economy was surprisingly stronger last week, supporting investor sentiment,” said Alex Wong, asset-management director at Ample Capital Ltd. in Hong Kong. “The market moved too fast last week. After the weekend, investors are calming down and rethinking about what is happening. But sentiment remains cautious and people are reluctant to chase the rally.”
PICC surged 10 percent to HK$13.40 after saying its first-half profit almost doubled from a year earlier, while China Resources Cement gained 8.6 percent to HK$7.17 after reporting its net income for the first six months surged to HK$2.05 billion ($263 million) from HK$607.2 million a year earlier.
China Hongqiao Group Ltd., an aluminum products maker, soared 5.8 percent to HK$6.40, and Chongqing Rural Commercial Bank Co., a mainland financial-services provider, advanced 7.5 percent to HK$3.88 after also saying first-half profit increased.
Of the 48 companies on the Hang Seng Composite Index that announced semi-annual profit this month, about 79 percent reported positive growth.
Li & Fung gained 7.6 percent to HK$13.82. HSBC Holdings Plc, the U.K.-based lender that made a fifth of its revenue in North America last year, jumped 4 percent HK$69.80.
Futures on the Standard & Poor’s 500 Index rose 0.6 percent today. In New York, the index gained 0.5 percent on Aug. 12 after the Commerce Department reported July retail sales rose 0.5 percent, the largest increase in four months.
The Hang Seng Index tumbled 6.3 percent last week after Standard & Poor’s cut the U.S. government’s credit rating one level to AA+. Stocks also declined as China reported its inflation accelerated in July and industrial output rose less than estimated, and as Europe’s debt crisis showed signs of worsening, raising concern the global economy will slow. Shares on the index traded at 10.8 times forecast earnings, compared with 11.9 times for the S&P 500.
Among stocks that fell today, Ajisen (China) Holdings Ltd., a restaurant chain being investigated by the government for how it discloses the nutritional content of its soup, tumbled 7.2 percent to HK$9.74 after resuming trading following its suspension on Aug. 6. China Daily reported last month the company used powders and instant seasoning for its noodle soup, not pig bones as claimed.
Futures on the Hang Seng Index increased 3.2 percent to 20,164. The HSI Volatility Index slumped 15 percent to 32.42, indicating options traders expect a swing of 9.3 percent in the Hang Seng Index in the next 30 days.