Hong Kong stocks climbed, with the Hang Seng Index rising after its first weekly loss in a month, as Chinese banks increased. Gains were tempered by declines in exporters amid speculation that U.S. lawmakers will fail to reach a budget deal in time to avert the so-called fiscal cliff.
China Minsheng Banking Corp., the nation’s first non-state lender, led the country’s financial companies higher, adding 1.8 percent. Cathay Pacific Airways Ltd., Asia’s biggest international carrier, gained 1.4 percent after planned industrial action was called off. Li & Fung Ltd., a supplier of toys and clothes to Wal-Mart Stores Inc., slid 0.7 percent as a year-end deadline looms for U.S. lawmakers to avoid more than $600 billion in automatic tax increases and spending cuts.
The Hang Seng Index increased 0.2 percent to close at 22,541.18. Hong Kong’s market was only open for a half day ahead of a two-day holiday for Christmas. Trading volume on the measure, which last week capped its first decline in five weeks, was 16 percent lower than the 30-day average, according to data compiled by Bloomberg. The Hang Seng China Enterprises Index of mainland companies rose 0.4 percent to 11,541.18.
“There’s hardly any movement, everyone is in holiday mode,” said Francis Lun, Hong Kong-based managing director at Lyncean Securities Ltd., adding that any movement in Hong Kong stocks was coming from sentiment about the mainland. “There’s optimism that the Chinese economy will grow strongly again after a deep slide in the third quarter.”
Hong Kong’s benchmark index advanced 22 percent this year through Dec. 21 as central banks from Europe, the U.S. and Japan announced stimulus, and so-called “hot money” entered the city amid optimism China’s economy is bottoming out. Hong Kong’s de facto central bank injected more than $10 billion into markets since October in defense of the city’s currency peg to the U.S. dollar.
Shares on the measure traded at 11.8 times average estimated earnings yesterday, compared with 13.8 for the Standard & Poor’s 500 Index and 12.8 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Chinese stocks listed in Hong Kong followed mainland-listed shares higher as the Shanghai Composite Index advanced 0.5 percent.
“There’s a light news flow as the economic momentum remains unchanged,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “We’ve seen a decent rally this month and buying sentiment will probably continue after stocks consolidate around this level.”
China Minsheng gained 1.8 percent to HK$8.50. China Construction Bank Corp., the nation’s second-largest lender by market value, climbed 1.1 percent to HK$6.21. Bank of Communications Co. increased 0.4 percent to HK$5.70.
Cathay shares gained 1.4 percent to HK$14.22, the biggest gain on the Hang Seng Index, after its flight attendants union agreed on a labor deal, averting the threat of possible industrial action over the Christmas travel period.
Futures on the S&P 500 index fell 0.5 percent today after the gauge gained 1.2 percent last week. Fewer than two weeks remain to avert the so-called fiscal cliff, more than $600 billion in automatic spending cuts and tax increases to take effect in January. The Congressional Budget Office has said that a failure to avert those changes would probably lead to a recession in the first half of 2013.
Exporters fell in Hong Kong, with Li & Fung declining 0.7 percent to HK$13.38. AAC Technologies Holdings Inc., which supplies speakers to Apple Inc., sank 1.3 percent to HK$26.60. Man Wah Holdings Ltd., a sofa maker that gets about half its sales from the U.S., dropped 0.1 percent to HK$6.59.
Futures on the Hang Seng Index gained 0.4 percent to 22,556. The HSI Volatility Index slid 5.4 percent to 15.91, indicating traders expect a swing of 4.6 percent for the equity benchmark in the next 30 days.