Hong Kong stocks rose, with the benchmark index capping its highest closing level in three weeks, after U.S. new-home sales beat estimates, raising prospects that a firmer recovery will benefit Asian economies.
Techtronic Industries Co., a power-tool maker that counts North America as its biggest market, increased 2.5 percent. Huaneng Power International Inc., the publicly traded unit of China’s largest electricity producer, advanced 6 percent after its first-quarter profit more than doubled. Aluminum Corp. of China Ltd., the nation’s largest supplier of the light metal by market value, rose 2.1 percent.
The Hang Seng Index climbed 1.7 percent to 22,183.05, its highest close since April 3, after yesterday dropping the most in a week on China’s weaker-than-expected preliminary manufacturing data. All but two stocks rose in the 50-member gauge, with trading volume 3.7 percent above the 30-day intraday average. The Hang Seng China Enterprises Index of Chinese companies listed in the city increased 2 percent to 10,634.37.
“Investors’ risk appetite increased after the U.S. new-home sales data,” said Mari Oshidari, a Hong Kong-based Asia market strategist at Okasan Securities Group Inc. “Yesterday’s preliminary PMI data was another blow to China’s outlook. In the longer-term, shares will remain in the doldrums even with cheaper valuations because of uncertainties surrounding the Chinese economy and the spread of bird flu.”
The Hang Seng Index fell 3.8 percent this year through yesterday, the second-worst performance among developed markets after Canada, amid banking woes in Cyprus, an outbreak of a new bird-flu virus and as reports on China’s economic growth and industrial production disappointed investors.
Shares on the measure traded at 10.4 times estimated earnings yesterday, compared with a five-year average of 12.7 and the Standard & Poor’s 500 Index’s multiple of 14.3, data compiled by Bloomberg show.
Chinese stocks are becoming attractive with the decline in equity valuations and corporate profit-growth poised to level out, according to Goldman Sachs Asset Management.
Futures on the Standard & Poor’s 500 Index gained 0.3 percent. The gauge climbed 1 percent yesterday as earnings from Travelers Cos. to Netflix Inc. beat estimates and new-home sales in the U.S. rose 1.5 percent in March. Purchases of single-family properties climbed to a 417,000 annual pace, Commerce Department figures showed in Washington, exceeding the median estimate of 416,000.
Techtronic gained 2.5 percent to HK$18.64, and HSBC Holdings Plc, a lender that received about a fifth of its revenue from North America last year, rose 2.4 percent to HK$81.95.
Shares in Hong Kong sank yesterday after the preliminary reading of a Purchasing Managers’ Index by HSBC and Markit Economics fell to 50.5 in April from 51.6 the previous month, trailing the 51.5 median forecast of economists.
Aluminum Corp. of China rose 2.1 to HK$2.89, while Jiangxi Copper Co., the country’s biggest producer of the metal, rebounded 1.5 percent to HK$15.10 after falling eight of the previous nine trading days. Belle International Holdings Ltd., the nation’s largest footwear retailer, advanced 6.1 percent to HK$12.86, erasing yesterday’s losses.
Huaneng Power rose 6 percent to HK$8.80 after saying first-quarter profit surged to 2.55 billion yuan ($413 million). China Resources Power Holdings Co., a utility that owns wind farms, rose 3.2 percent to HK$24.45.
China Resources Land Ltd., the No. 2 mainland developer traded in Hong Kong, advanced 2.7 percent to HK$23 and Shimao Property Holdings Ltd., controlled by billionaire Hui Wing Mau, gained 3.1 percent to HK$16.66. China has no current plan for a property tax trial, the People’s Daily reported, citing an unidentified official from the State Administration of Taxation.
Hang Seng Index futures rose 1.6 percent to 22,137. The HSI Volatility Index dropped 3.3 percent to 16.61, indicating traders expect a swing of 4.8 percent for the equity benchmark in the next 30 days.