Hong Kong stocks rose, with the benchmark index capping its biggest weekly gain since January, on speculation central banks will take steps to bolster economic growth in the face of Europe’s debt crisis.
Industrial & Commercial Bank of China Ltd., the world’s No. 1 lender by value, advanced 3.3 percent. Esprit Holdings Ltd., a clothier that tumbled 32 percent the past two days after its chief executive officer and chairman quit, rebounded 9.9 percent. Techtronic Industries Co., a power-tools maker that relies on North America for almost three quarters of its sales, climbed 1.9 percent on optimism the Federal Reserve will stimulate the U.S. economy after consumer prices fell.
The Hang Seng Index climbed 2.3 percent to 19,233.94 as of the 4 p.m. close. All but three of the 49 companies on the gauge advanced, sending the measure to a 4 percent gain for the week, its first weekly advance in six and the steepest increase since Jan. 20. Volume on the gauge was 56 percent above its 30-day average. The Hang Seng China Enterprises Index of mainland stocks rose 2.4 percent to 9,744.55.
“At this stage there’s probably quite a high chance that the U.S. may do more easing,” and people are also expecting interest rate cut in China, said Terrace Chum, a Hong-Kong based fund manager at Manulife Asset Management, which oversees $220 billion. The Greek election result would “definitely set the tone for the global risk aversion level.”
Hong Kong’s benchmark index tumbled 13 percent through yesterday from this year’s high on Feb. 29 as U.S. and China economic reports showed signs of a slowdown, and amid increasing concern Europe’s debt crisis is worsening. Companies on the Hang Seng Index traded at 9.7 times estimated earnings on average yesterday, compared with 12.7 times for the Standard & Poor’s 500 Index and 10.1 times for the Stoxx Europe 600 Index.
The biggest banks in China rallied in the afternoon. ICBC climbed 3.3 percent, the most since February, to HK$4.44. China Construction Bank Co., the country’s second-largest, increased 2.7 percent to HK$5.28. Bank of Communications Co. rose 3.6 percent to HK$5.18.
Chinese railroad shares gained after Economic Information Daily reported China plans to build six new coal transport railways, citing Wang Mengshu of the Chinese Academy of Engineering.
China Railway Group rose 2.3 percent to HK$3.07, while China Railway Construction Corp. climbed 2.9 percent to HK$6.08. CSR Corp., a Chinese train maker, advanced 2.3 percent to HK$5.70.
Esprit jumped 9.9 percent to HK$10.14, the steepest gain in the Hang Seng Index. The clothier said it won’t change a strategy intended to boost the fashion brand’s revenue, even after its top two executives resigned.
Futures on the S&P 500 rose 0.3 percent today. The gauge added 1.1 percent yesterday, erasing a weekly loss. More Americans applied for jobless benefits and consumer prices dropped the most in three years, giving the Federal Reserve room to spur an economy that’s generating little growth and inflation.
Techtronic climbed 1.9 percent to HK$9.14. Li & Fung Ltd., a supplier to Wal-Mart Stores Inc., rose 2.6 percent to HK$15.20.
Markets “believe that low inflation plus increasingly soft labor-market numbers equals another round of quantitative easing,” said Matthew Sherwood, Perpetual Investments’ head of investment markets research in Sydney. Perpetual manages about $23 billion. “Investors are on guard for the Greek election on June 17.”
Greeks vote in a general election on June 17 after balloting in May failed to produce a coalition government. The result may determine whether Greece abides by spending reductions imposed upon it to receive two international bailouts, seen as key to remaining in the euro.
Hang Seng Index futures expiring this month climbed 2.5 percent to 19,233. The HSI Volatility Index slid 0.5 percent to 27.77, indicating traders expect a swing of about 8 percent in the benchmark index during the next 30 days.