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Hong Kong Equities Advance as Insurance Companies Climb

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Feb. 25 (Bloomberg) -- Hong Kong stocks rose, with the benchmark index advancing for the first time in three days, as insurance companies climbed. Gains were limited after the city doubled taxes on some property sales and data showed China’s manufacturing may grow at its slowest in four months.

AIA Group Ltd., Asia’s third-largest insurer, climbed 1.1 percent to a record close ahead of the results this week expected to show full-year profit jumped 68 percent. Luk Fook Holdings (International) Ltd. gained 4.4 percent after the jewelry retailer reported increased sales in Hong Kong and Macau during the Lunar New Year holidays. Sun Hung Kai Properties Ltd., the city’s biggest developer, slid 1.3 percent after Hong Kong’s home sales fell over the weekend.

The benchmark Hang Seng Index added 0.2 percent to close at 22,820.08 in Hong Kong, with about four shares rising for every three that fell. The gauge last week fell the most in three months on concern the U.S. will rein in stimulus while China signaled it may take steps to cool its property market, where home prices have surged just as in Hong Kong.

“Most investors feel a little bit more comfortable this year about macroeconomic prospects,” said Marco Li, Hong Kong-based portfolio manager at Manulife Asset Management, which oversees $218 billion globally. “Company fundamentals are still looking pretty okay. As Hong Kong goes through the earnings reporting season, we will get to see whether those fundamentals follow through.”

Esprit Holdings Ltd. and AIA Group are among the more than 100 companies listed in the city scheduled to report earnings this week, according to data compiled by Bloomberg News.

Shares on the benchmark index traded at 11.1 times estimates earnings, compared with 13.7 times for the Standard & Poor’s 500 Index and 12.4 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

China PMI

The Hang Seng China Enterprises Index of mainland companies pared an advance of as much as 1 percent, adding 0.2 percent to 11,333.98.

The preliminary reading of HSBC’s and Markit Economics’ purchasing managers’ index for China was 50.4 in February. That compares with a 52.3 final reading for January and the 52.2 median estimate of 11 analysts surveyed by Bloomberg News. A number above 50 indicates expansion.

AIA Group rose 1.1 percent to HK$32.30. The insurer is expected to report net income of $2.68 billion for the year to November 2012, according to the average of 12 analyst estimates tracked by Bloomberg. That compares with $1.6 billion the previous year. The results are due Feb. 27.

Want Want

Luk Fook climbed 4 percent to HK$26.05 after the company reported same-store shares increased 42 percent during Feb. 3 - Feb. 16 period compared with the holiday period a year earlier.

Want Want China Holdings Ltd., China’s largest maker of rice cakes, rose 2.9 percent to HK$10.56 after HSBC raised its rating to overweight from neutral.

Hong Kong developers declined. Sun Hung Kai slipped 1.3 percent to HK$117.70. Henderson Land Development Co., the Hong Kong builder controlled by billionaire Lee Shau-kee, lost 0.8 percent to HK$53. Kerry Properties Ltd. dropped 1 percent to HK$39.40.

The HSI Volatility Index gained 1.4 percent to 16.05, indicating traders expect a swing of about 4.6 percent during the next 30 days. Futures on the Hang Seng Index expiring this month added 0.4 percent 22,848.

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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