Hong Kong Stocks Rise on China Stimulus, City Home Sales

Hong Kong stocks rose as China’s services industry weakened, stoking speculation the nation will step up measures to stimulate the world’s second-largest economy, and as realtors forecast the most home sales in six years in the island city.

China Construction Bank Corp., the nation’s second-largest lender, climbed 1.3 percent, leading financial stocks higher. New World Development Co., the Hong Kong property company controlled by the family of billionaire Cheng Yu-tung, gained 1.8 percent as realtors said demand for homes is increasing amid expectations for prolonged low-interest rates. Cathay Pacific Airways Ltd. increased the most on the index, adding 3.7 percent after the International Air Transport Association boosted its earnings forecast.

The Hang Seng Index gained 0.6 percent to 20,958.61 as of 10:53 a.m. local time, after being closed the past two days for a local holiday. The Hang Seng China Enterprises Index of mainland companies added 0.7 percent to 9,900.94. Markets in mainland will remain closed through Oct. 5.

“China’s economy is decelerating and will probably achieve a soft landing,” said Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management (Asia) Ltd., which oversees about $8 billion. “China will introduce additional stimulus measures in their own time.”

The Hang Seng Index extending last month’s advance of 7 percent, the most since January. For the quarter ended September, the gauge gained 7.2 percent. Almost three shares rose for each that fell on the measure today, with trading volume 15 percent above the 30-day average.

China Non-Manufacturing

The Hang Seng China Enterprises Index has fallen about 0.5 percent this year on concern China’s government isn’t easing policy fast enough to counter the economic slowdown.

China’s non-manufacturing industries expanded at the weakest pace since at least March 2011 as officials struggle to reverse an economic slowdown, a report showed today.

The purchasing managers’ index fell to 53.7 from 56.3 in August, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in Beijing. Readings above 50 indicate expansion.

Bank shares gained the most in Hong Kong today, with the Hang Seng Finance Index leading sectors, adding 0.6 percent. China Construction rose 1.3 percent to HK$5.46. China Minsheng Banking Corp., the nation’s first privately owned lender, gained 1.2 percent to HK$6.19. Agricultural Bank of China Ltd., the nation’s third-largest lender by market value, climbed 1.3 percent to HK$3.06.

Developers Gain

Hong Kong developers, seeking funds to tap an expanding government land supply, are this month preparing to sell the most homes in six years as expectations for prolonged low-interest rates fuel demand.

Real-estate companies may sell more than 3,300 units from eight new projects in October, according to Buggle Lau, chief analyst at Midland Holdings Ltd., the city’s biggest publicly traded realtor. That would be the highest monthly figure since August 2006, Lau said.

New World advanced 1.8 percent to HK$12.24. Wharf (Holdings) Ltd., the Hong Kong builder expanding in at least 14 other Chinese cities, increased 1.5 percent to HK$54.65. Cheung Kong Holdings Ltd., the developer controlled by Li Ka-shing, Hong Kong’s richest man, rose 1.1 percent to HK$114.90.

S&P Futures

Futures on the S&P 500 fell less than 0.2 percent today. The index added 0.1 percent in New York yesterday as a rebound in Apple Inc. overshadowed disappointment after Spanish Prime Minister Mariano Rajoy said a bailout request is not imminent. Spanish regional presidents met in Madrid yesterday after Economy Minister Luis de Guindos said the nation is pressing on with its analysis of whether to seek a bailout.

The Hang Seng Index traded at 11 times estimated earnings, compared with 9.7 for the Shanghai Composite Index and 14 for the S&P 500.

Futures on the Hang Seng Index added 0.4 percent to 20,848 today. The HSI Volatility Index gained 5.9 percent to 16.18, indicating traders expect a swing of 4.6 percent in the equity benchmark in the next 30 days.