Hong Kong shares rose amid speculation China will ease monetary policy to spur growth and as companies from Hang Seng Bank Ltd. and Country Garden Holdings Co. posted earnings that beat estimates.
Agricultural Bank of China Ltd. advanced 3.3 percent, pacing gains among Chinese lenders, after a report mainland regulators allowed banks to extend loans to local governments for infrastructure projects. Hang Seng Bank, a Hong Kong lender majority owned by HSBC Holdings Plc, jumped 5.1 percent, while mainland developer Country Garden gained 3.4 percent.
“There’s a likelihood of further monetary easing in China,” said Cedric Ma, Hong Kong-based senior investment strategist at Convoy Asset Management Ltd., which oversees about $200 million. “The market still has some legs as long as there isn’t a blowout in Europe. Except for export-related companies, earnings of Hong Kong companies look OK.”
The Hang Seng Index advanced 1.7 percent to 21,568.73 as of the 4:00 p.m. close in Hong Kong. The gauge rose 15 percent this year through yesterday on signs the U.S. economy is improving, on optimism Europe will contain its debt crisis and amid bets China will relax monetary policy.
The Hang Seng China Enterprises Index of mainland companies listed in the city climbed 1.9 percent to 11,761.30.
Futures on the Standard & Poor’s 500 Index added 0.3 percent today. The index rose 0.1 percent in New York yesterday on better-than-estimated housing data and as financial shares rallied.
Mainland lenders gained after the China Securities Journal reported the China Banking Regulatory Commission allowed banks to keep lending to local governments for road construction and other projects. The regulator had previously allowed new loans only for building affordable housing units, it said.
Agricultural Bank of China gained 3.3 percent to HK$3.80. Industrial & Commercial Bank of China Ltd., the world’s biggest lender, climbed 2.2 percent to HK$5.64. Bank of Communication Co. advanced 4.5 percent to HK$6.33.
China may loosen property-market policies as early as the end of the first quarter, Helen Qiao, an economist at Morgan Stanley, said in Beijing yesterday. Increasing pressure from local authorities may cause the change, she said.
Hang Seng Bank increased 5.1 percent to HK$106.70 after the lender said full-year net income rose 12 percent to HK$16.7 billion ($2.15 billion). That beat the HK$16 billion average estimate of six analysts surveyed by Bloomberg News.
Country Garden advanced 3.4 percent to HK$3.66. The Guangdong-based developer said full-year profit increased 36 percent to 5.8 billion yuan ($920.7 million), exceeding the average analyst estimate of 5.4 billion yuan compiled by Bloomberg.
Of the 39 companies in the Hang Seng Composite Index that posted earnings since Jan. 9, 16 companies missed analysts’ estimates, while seven exceeded expectations, data compiled by Bloomberg shows.
Road King Infrastrucuture Ltd. gained 1.9 percent to HK$5.35 after the highway operator said full-year profit increased 31 percent to HK$818 million.
HKT Trust and HKT Ltd. climbed 3.6 percent to HK$5.50 after the owner of Hong Kong’s biggest telecommunications company said profit rose 32 percent to HK$1.22 billion in the 12 months through December.
Transportation companies rebounded as crude oil futures declined for a second-day. Cathay Pacific Airways Ltd., Hong Kong’s biggest airline, climbed 5.7 percent to HK$14.88. China Shipping Container Lines Co., the nation’s second-largest box-cargo carrier, gained 2.7 percent to HK$2.64.
The recent rally boosted the price of shares in the Hang Seng Index to 10.8 times estimated earnings as of yesterday. That compares with 13.1 times for the Standard & Poor’s 500 Index and 11 times for the Stoxx Europe 600 Index.
Futures on the Hang Seng Index expiring this month rose 0.9 percent to 21,402. The HSI Volatility Index slid 4.6 percent to 22.03, indicating options traders expect a swing of 6.3 percent in the benchmark index over the next 30 days.