Hong Kong stocks climbed, with the benchmark index rising the first time this week, as banks reversed earlier losses and utilities advanced. Developers slid as HSBC Holdings Plc raised mortgage rates in the city, augmenting concern that China is boosting property curbs.
Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, climbed 1.1 percent after falling as much as 1.3 percent. China Resources Gas Group Ltd., a distributor of piped natural and petroleum gas, advanced to a record high after its full-year profit rose. Sun Hung Kai Properties Ltd., Hong Kong’s biggest builder, slid 3.3 percent.
The Hang Seng Index climbed 0.3 percent to 22,619.18 at the close, the biggest gain since March 8. Volume was 9.1 percent above the 30-day average, according to data compiled by Bloomberg. The Hang Seng China Enterprises Index of mainland companies increased 0.6 percent to 11,101.96, reversing an earlier slide that saw the gauge briefly extend losses to more than 10 percent from a Feb. 1 high.
“In the short term, the market is still under pressure but right now it’s going into a longer term support level zone,” said Linus Yip, a Hong Kong-based strategist at First Shanghai Securities Ltd. “We expect there may be some bottom fishing and bargain hunting coming out.”
About five stocks declined for every four that gained on the Hang Seng Index. The gauge erased this year’s gains yesterday as Chinese developers tumbled amid concern the government is intensifying efforts to curb property prices, and as data in the past week has signaled slower growth in the world’s second-largest economy.
The benchmark equity measure traded at 10.9 times estimated earnings yesterday, compared with 14.1 for the Standard & Poor’s 500 Index and 12.7 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Banks rebounded. ICBC rose 1.1 percent to HK$5.43. China Construction Bank Corp., the No. 2 lender by value, added 1.3 percent to HK$6.28 after slipping as much as 0.8 percent. The Hang Seng Financial Index retreated 2.5 percent in the previous two days.
A measure of utility companies had the biggest gain among the 11 industry groups in the Hang Seng Composite Index. China Resources Gas jumped 5.3 percent to HK$19.48 after saying its full-year profit rose 38 percent from a year earlier.
China Longyuan Power Group Corp., a coal and wind power producer that yesterday capped its longest losing streak since August 2011, rose 5.4 percent to HK$6.79. Kunlun Energy Co., a Chinese gas supplier controlled by PetroChina Co., advanced 2.3 percent to HK$16.28, the biggest gain in the Hang Seng Index.
Futures on the S&P 500 advanced 0.2 percent. The Dow Jones Industrial Average extended its longest rally since 1996 yesterday after U.S. Commerce Department data showed sales at retailers rose 1.1 percent in February, the most in five months and more than twice the median estimate of economists.
Yue Yuen Industrial (Holdings) Ltd., a supplier to Nike Inc., climbed 1.2 percent to HK$25.40, while Techtronic Industries Co., a power-tool maker that counts the U.S. as its biggest market, advanced 3 percent to HK$17.60.
More than half of the 10 biggest drops in the Hang Seng Index were developers. Sun Hung Kai slumped 3.3 percent to HK$107.90. New World Development Co., the Hong Kong builder controlled by billionaire Cheng Yu-tung, sank 0.9 percent to HK$13.90 while Henderson Land Development Co., controlled by billionaire Lee Shau-kee, retreated 3.3 percent to HK$49.55.
HSBC, Europe’s largest lender by market value, and Standard Chartered raised Hong Kong mortgage rates by 25 basis points after the banking regulator tightened risk rules on concern a property bubble may undermine financial stability. HSBC rose 0.9 percent to HK$84.75 while StanChart, the U.K. bank which earns more than half its profit from Asia, slipped 0.3 percent to HK$201.8.
“We reiterate our cautious view on Hong Kong property following the faster-than-expected mortgage rate hike by HSBC,” Venant Chiang and Christie Ju, analysts at Jefferies Group LLC, said in a report dated yesterday. “While the 25 basis points hike may appear marginal, we see significant impact to the physical market, and increasing risk. On the back of rising supply and shrinking demand, we expect more price cuts as a result of policies.”
Hong Kong last month doubled the sales tax on property costing more than HK$2 million ($258,000) and targeted commercial real estate for the first time as bubble risks spread.
Shimao Property Holdings Ltd., the mainland developer controlled by billionaire Hui Wing Mau, slid 1.3 percent to HK$13.44, while Country Garden Holding Co., based in China’s southern province of Guangdong, slid 2.9 percent to HK$3.63.
Beijing will strengthen a review of homebuyers qualifications to purchase property in the city as a local policy for real estate curbs, the China Securities Journal reported, citing an unidentified person. The city may also release some policies on existing home transactions, the report said, citing the person.
Chinese developers led the retreat in Hong Kong yesterday after Sina.com reported Shenzhen banned developers from raising new home prices. The market extended its declines yesterday after China’s central bank Governor Zhou Xiaochuan said policy is “no longer relaxed” amid the threat of inflation.
Among other shares that rose today, Chinese railway companies rebounded. CSR Corp., the country’s biggest trainmaker, rose 2.7 percent to HK$5.66 after capping a three-day, 13 percent loss yesterday on concern a plan to break up the rail ministry will reduce investment. China Railway Construction Corp., the nation’s No. 2 rail builder by market value, gained 3 percent to HK$7.52.
“The restructuring of China’s Ministry of Railways should generate greater efficiencies for the railway industry,” Barclays Plc analysts led by Victoria Li said in a report dated today. The efficiency would result in about 1.11 trillion yuan ($179 billion) of incremental spending.
ASM Pacific Technology Ltd., a maker of assembly and packaging equipment for the semiconductor industry, retreated 11 percent to HK$85.85 after its parent ASM International NV, a Dutch semiconductor service company, sold an 11.9 percent stake for HK$4.27 billion.
Hang Seng Index futures climbed 0.3 percent to 22,516. The HSI Volatility Index dropped 4.7 percent to 14.96, indicating traders expect a swing of 4.3 percent for the equity benchmark in the next 30 days.