Hong Kong stocks rose, with the benchmark index capping its biggest two-day gain since January, as projections showed pro-bailout parties won control of Greece’s parliament in an election viewed as a referendum on whether the debt-strapped country will stay in the euro.
HSBC Holdings Plc, Europe’s largest bank, rose 1 percent. China Mengniu Dairy Co. gained 6.8 percent after Denmark’s Arla Foods said it plans to buy a stake in the milk producer. Hong Kong Exchanges & Clearing Ltd. fell 4.5 percent after Morgan Stanley said the bourse’s bid for the London Metal Exchange was “extremely expensive.”
The Hang Seng Index climbed 1 percent to 19,427.81 at the close. The gauge capped a two-day gain of 3.3 percent, the most since Jan. 18. All but five of 49 companies on the gauge advanced, with volume 11 percent below the 30-day average. The Hang Seng China Enterprises Index of mainland stocks rose 0.8 percent to 9,818.76.
‘We’ve avoided the potential pitfalls of Greek exit from the Eurozone,” said Tim Schroeders, a portfolio manager who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “I expect markets will be a bit happier in the short term before addressing longer-term issues.”
Hong Kong’s benchmark index rose 4 percent last week, its first weekly advance in six and the biggest increase since Jan. 20, amid speculation central banks will take steps to bolster economic growth in the face of Europe’s debt crisis. Companies on the Hang Seng Index traded at 9.9 times estimated earnings on average on June 15, compared with 12.9 for the Standard & Poor’s 500 Index and 10.2 for the Stoxx Europe 600 Index.
New Democracy won 129 seats, enough to put together a coalition with Pasok, easing concern that Greece would reject austerity measures needed to qualify for international aid. The parties would have 162 seats if they agree to govern together in the 300-member parliament, according to Interior Ministry projections with 99 percent of yesterday’s vote counted.
“Greece’s election is a good result and will provide some short-term relief,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $100 billion. “This will put to rest for a little while the prospect of Greece leaving the euro.”
Stocks also advanced after German Chancellor Angela Merkel’s government signaled willingness to loosen Greece’s austerity requirements so long as the nation abides by its obligations under the bailout program.
HSBC rose 1 percent to HK$67.45. Esprit Holdings Ltd., a clothier that counts Europe as its biggest market, gained 1 percent to HK$10.24. Cosco Pacific Ltd., which operates a port in Greece, climbed 2 percent to HK$10.14.
China Mengniu jumped 6.8 percent to HK$21.15 after Denmark’s Arla Foods said it plans to buy about a 6 percent stake in the milk producer.
Samsonite International SA, the world’s largest branded-luggage maker, jumped 7.6 percent to HK$13 after saying its products were safe following a report some contained carcinogens. The shares tumbled 16 percent on June 15 after the Hong Kong Consumer Council said handles of some Samsonite luggage contained materials which could cause cancer. The immediate danger is minimal, it said.
Chinese developers rose even after home values fell in a record 54 of 70 cities tracked by the government in May as developers cut prices to boost sales amid housing curbs. China will continue to conduct differentiated housing credit policies, the official Xinhua News Agency reported, citing an unidentified official from the Ministry of Housing and Urban-Rural Development.
Hong Kong Exchanges dropped 4.5 percent to HK$107.40. The bourse said after the market closed on June 15 it has agreed to pay 1.39 billion pounds ($2.15 billion) for the LME. The price was “extremely expensive” and the bourse will probably sell shares to finance the purchase, Morgan Stanley wrote in a report dated yesterday.
Hang Seng Index futures expiring this month climbed 0.7 percent to 19,459. The HSI Volatility Index tumbled 12 percent to 24.56, a level indicating traders expect a swing of about 7 percent in the benchmark index during the next 30 days.