Hong Kong stocks rose, with the benchmark index capping its biggest weekly gain in four months. Aluminum Corp. of China advanced on an asset-sale plan while China Resources Power Holdings Co. tumbled after saying it will issue shares for a merger.
Aluminum Corp., also known as Chalco, surged 5.9 percent on a plan to sell 8.18 billion yuan ($1.3 billion) of assets, including production plants. Guangzhou Automobile Group Co., a Toyota Motor Corp. partner, jumped 7.6 percent after revenue climbed last month. Skyworth Digital Holdings Ltd. climbed 1.1 percent after the television maker said mainland TV sales rose in April. China Resources Power sank 10 percent after saying it will issue almost one new share for each held in a merger deal with China Resources Gas Group Ltd.
The Hang Seng Index rose 0.5 percent to 23,321.22 at the close in Hong Kong, with about three stocks gaining for each that fell on the 50-member gauge. The gauge rose 2.8 percent for the week, its steepest since the week ended Jan. 4. Shares traded in Hong Kong dropped yesterday after China’s inflation rose more than expected while producer prices declined.
“The momentum in China’s economy is quite bad right now,” said Alex Wong, a Hong Kong-based director at Ample Capital Ltd. “Fundamentally, you have to be alert of negative surprises from China. But you cannot go short aggressively either because overseas markets are strong.”
Trading volume on the city’s benchmark index was 11 percent less than the 30-day average, according to data compiled by Bloomberg. The Hang Seng China Enterprises Index of mainland companies gained 0.7 percent to 11,347.41.
The Hang Seng Index climbed 8.4 percent from this year’s low on April 18 as signs the U.S. economy is improving countered a slowdown in China’s growth. The equity measure traded at 11.1 times estimated earnings, below its five-year average of 12.8, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index traded at 14.7 times estimated earnings yesterday.
Futures on the S&P 500 advanced 0.3 percent today. The measure fell 0.4 percent yesterday, following five consecutive days of record closes, after Federal Reserve Bank of Philadelphia President Charles Plosser said he favors scaling back the central bank’s pace of stimulus.
Chalco, China’s biggest producer of aluminum, gained 5.9 percent to HK$3.24. The sale of stakes in its aluminum-fabrication units will “optimize the asset structure, lower the debt-to-asset ratio and improve the debt portfolio of the company,” the company said yesterday. Most of the assets will be purchased by Chalco’s parent.
Guangzhou Automobile jumped 7.6 percent to HK$7.39, the steepest gain on the Hang Seng Composite Index, after saying its sales last month reached 76,349 vehicles, compared with 61,176 a year earlier. Great Wall Motor Co., a Chinese maker of sport utility vehicles and pickup trucks, increased 1 percent to HK$35.75. Dongfeng Motor Group Co. rose 2.7 percent to HK$12.90.
Skyworth Digital rose 1.1 percent to HK$5.65 after saying China’s April television sales rose 27 percent from a year earlier. DBS Vickers Hong Kong Ltd. raised the rating on the stock to buy from hold.
China Resources Power tumbled 10 percent to HK$22.85, the biggest drop and the most actively traded by shares on the Hang Seng Index. The company will issue 0.97 new shares to China Resources Gas for every share held in a deal valued at HK$54.8 billion ($7.1 billion), according to a statement today. China Resources Gas declined 2.5 percent to HK$21.30.
Dongyue Group plunged 10 percent to HK$4.14 after the Chinese chemical maker said its first-half profit may decrease “substantially” from a year earlier.
Futures on the Hang Seng Index rose 0.3 percent to 23,180. The HSI Volatility Index gained 0.3 percent to 14.70, indicating traders expect a swing of 4.2 percent for the equity benchmark in the next 30 days.