Hong Kong stocks advanced, with the city’s benchmark index gaining for the first time in four days and closing at its highest level since May 2011, after profits at China’s industrial companies climbed for a fourth month.
Anhui Conch Cement Co., China’s biggest maker of the building material, rose 3.5 percent. Dongfeng Motor Group Co. gained 3.6 percent after Volvo AB agreed to buy a minority stake in the commercial vehicle unit of the Chinese automaker. China Cosco Holdings Co. dropped 5.1 percent after the nation’s biggest shipping company said it may face trading restrictions.
The Hang Seng Index gained 0.4 percent to close at 23,671.88 in Hong Kong, with about two shares rising for each that fell. The gauge is heading for a fifth monthly advance, the longest streak of such gains since July 2009, amid optimism China’s economy will continue to recover.
“Improving economic data has been a major driver for the equity market rally,” said Castor Pang, head of research at Core-Pacific Yamaichi International Ltd. in Hong Kong. “We’re still seeing some upside momentum. Investors are probably waiting for company earnings to come out before committing fresh funds into the market.”
Trading volume on the benchmark Hang Seng Index were 6.8 percent below the 30-day average, according to data compiled by Bloomberg. Shares on the measure traded at 11.5 times estimated earnings, compared with 13.7 for the Standard & Poor’s 500 Index.
The Hang Seng China Enterprises Index of mainland companies added 0.8 percent to 12,100.08. Profits at Chinese industrial companies increased 17 percent to 895 billion yuan ($144 billion) in December, the fourth month of advance, the National Bureau of Statistics said yesterday.
China’s cement makers advanced after Shenyin & Wanguo Securities Co. recommended the sector, saying demand for the building material may exceed expectations this year amid growing investment in infrastructure and rising property sales.
Anhui Conch jumped 3.5 percent to HK$29.75. China National Building Material Co. gained 2.6 percent to HK$12.06.
Dongfeng Motor rose 3.6 percent to HK$12.66. Volvo bought a 45 percent share in a Dongfeng unit that will make and sell trucks, buses and so-called special-purpose vehicles, for 5.6 billion yuan ($890 million), the Gothenburg, Sweden-based company said in a statement on Jan. 26.
Chinese brokerages rose on improved earnings prospects after the government said it would allow more stocks to be used for margin trading and short selling. Haitong Securities Co., the nation’s second-biggest listed brokerage, jumped 3.7 percent to HK$12.94. Citic Securities Co., the largest, added 0.5 percent to HK$19.82.
Shanghai will expand the number of stocks allowable for margin trading and short selling to 300 from 180 currently, according to a statement from the city’s stock exchange. Shenzhen will increase the number to 200 from 98, its exchange said in another statement. The changes will take effect Jan. 31.
“This will increase the commission earnings of brokerages,” He Zongyan, an analyst at Shenyin & Wanguo Securities, said in a phone interview from Shanghai today. “Brokerages will also benefit from the boost in liquidity.”
Chinese Estates Holdings Ltd., whose billionaire chairman Joseph Lau is facing trial for bribery and money-laundering in Macau, climbed 2.7 percent to HK$13.06 after the company declared a special dividend of HK$1 per share.
Anta Sports Products Ltd. jumped 7.4 percent to HK$7.40. The company may boost its dividend payout ratio as orders improve, Raymond Ching, an analyst at Bank of America Corp. Merrill Lynch, wrote in a note dated Jan. 25.
Among stocks that declined, China Cosco decreased 5.1 percent to HK$4.08, the biggest drop since Nov. 8. The company faces trading restrictions on its China shares after forecasting a “significant” loss for 2012.
The Hang Seng Volatility Index rose 2.5 percent to 12.59, indicating options traders expect a swing of 3.6 percent in the next 30 days. Futures on the Hang Seng Index added 0.3 percent to 23,670.