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Hong Kong Stocks Climb to 21-Month High; Developers Gain

Jan. 30 (Bloomberg) -- Hong Kong stocks rose, with the city’s benchmark index closing at its highest level since April 2011, as Chinese property developers and brokerages advanced.

Country Garden Holdings Co., the Chinese developer controlled by billionaire Yang Huiyan, jumped 6.1 percent after Fitch Ratings said the country’s homebuilding volume will rise this year. Citic Securities Co. led gains among China’s brokerages after Taiwan said it will double the investment limit for Chinese institutions. Shangri-La Asia Ltd. jumped 6.9 percent after the hotelier’s price target was raised at Citigroup Inc.

The Hang Seng Index gained 0.7 percent to close at 23,822.06 in Hong Kong. The benchmark equity gauge is heading for a fifth monthly advance, the longest such streak since July 2009, after the U.S. Federal Reserve embarked on a third round of quantitative easing in September and amid optimism China’s economy will continue its recovery. Shares on the gauge traded at 11.6 times estimated earnings, compared with 13.7 for the Standard & Poor’s 500 Index.

“Valuations are not too expensive,” said Linus Yip, chief strategist at First Shanghai Securities in Hong Kong. “Market liquidity is still good as investors switch from bonds to equities. Hong Kong is benefiting from the combination of improving global liquidity as well as improving economic numbers from China.”

Trading volume on the Hang Seng Index was 23 percent above the 30-day intraday average, according to data compiled by Bloomberg. More than three shares rose for each that fell.

Bull Market

The Hang Seng China Enterprises Index of mainland companies advanced 0.8 percent to 12,172.24. The Shanghai Composite Index climbed 1 percent, extending a bull-market rally that has seen the measure surge 22 percent since Dec. 3.

“The rally will remain strong as the local economy has shown evidence that it’s growing steadily,” Zhang Haidong, an analyst at Tebon Securities Co., said by phone from Shanghai. “We have risen a lot so there is a requirement for a correction. But this year, we are bound to gain.”

Chinese incomes rose faster in the countryside than in cities for a third year in 2012 amid government efforts to boost domestic consumption. Rural per-capita net income advanced 10.7 percent, compared with 9.6 percent for urban dwellers, partly on the rise in migrant laborers and their wages, the National Bureau of Statistics said Jan. 18.

“Rising rural incomes should definitely help boost consumption and aid rebalancing,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong. “Growth will gear down a bit as rising labor costs diminish investment incentives, but such consumption-led expansion will be more sustainable.”

Property Stocks

Chinese developers traded in Hong Kong advanced after Fitch Ratings said homebuilding volumes will rise this year on improved funding availability.

Country Garden climbed 6.1 percent to HK$4.21. Shimao Property Holdings Ltd., controlled by billionaire Hui Wingmau, increased 3.4 percent to HK$17.28. China Resources Land Ltd., a state-owned property company, rose 2.1 percent to HK$24.20.

China’s brokerages rallied after Taiwan’s securities regulator said yesterday the island will double the limit on mainland Chinese institutions’ securities investments in Taiwanese markets to $1 billion.

Citic Securities, China’s biggest brokerage, jumped 6.4 percent to HK$21.20. Haitong Securities Co. added 4.6 percent to HK$13.52.

Hengdeli Slumps

Cnooc Ltd., China’s biggest offshore oil explorer, rose 1.9 percent to HK$16.40. Crude traded near the highest level in four months before a Federal Reserve policy statement that may signal the central bank will keep adding stimulus in the U.S., the world’s biggest consumer of the fuel.

Shangri-La Asia jumped 6.9 percent to HK$18.18. Citigroup reiterated its buy rating and raised its price target by 3.4 percent to HK$19.50, saying earnings will increase in the next two years as the hotelier opens new accommodations in London and Manila.

Among stocks that declined, Hengdeli Holdings Ltd., the Chinese partner of Swatch Group AG, slumped 13 percent to HK$2.70 after Next Magazine reported it may have lost distribution rights for some Swiss watch brands. The company declined to comment on the report, Kelly Fung of Porda Havas International Finance Communication Group, which represents Hengdeli, said by phone today.

The Hang Seng Volatility Index rose 3.9 percent to 13.31, indicating options traders expect a swing of 3.8 percent in the next 30 days. Futures on the Hang Seng Index added 0.7 percent to 23,844.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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