Hong Kong stocks rose, with the benchmark index gaining the most in a week on low trading volume, as Hengdeli Holdings Ltd. jumped after China agreed to cut tariffs on Swiss watches and Cosco Pacific Ltd. surged.
Hengdeli, a retail partner of Swatch Group AG, surged 7.2 percent. Cosco Pacific, the container-terminal arm of China’s largest shipping group, gained 6.6 percent after Morgan Stanley raised its rating. China Taiping Insurance Holdings Co., an underwriter of life and property policies, soared 15 percent after saying it will buy its parent’s assets. First Pacific Co., an investment manager controlled by billionaire Anthoni Salim, slid 2.4 percent after announcing a $500 million rights offer.
The Hang Seng Index rose 1.1 percent to 22,924.25 at the close, its biggest gain since May 20. All but five stocks advanced on the 50-member gauge, which rose a second day after dropping 2 percent last week. Volume on the gauge was 29 percent below the 30-day intraday average. The Hang Seng China Enterprises Index of mainland companies gained 1.6 percent to 10,920.58.
“Hong Kong’s market is continuing yesterday’s rebound as we’re trying to recover last week’s losses,” said Jackson Wong, vice president of Hong Kong-based brokerage Tanrich Securities Co. “I recommend investors focus on Hong Kong fundamentals because we are relatively cheap compared to other markets. Once China’s economy can show some strength or turnaround, funds will start rotating from other countries like the U.S. and Japan.”
The Hang Seng Index traded at 10.8 times estimated earnings, compared with 15 on the Standard & Poor’s 500 Index and 13.4 on the Stoxx 600, according to data compiled by Bloomberg. The city’s benchmark is the worst-performing developed-market gauge this year, up just 0.1 percent this year through yesterday.
China’s Li Keqiang, speaking in Berlin during his first trip abroad as premier, said the economy faces “huge challenges” and reform will mean slower growth. The government will move forward with market-oriented reforms to generate stable growth after the economy unexpectedly slowed in the first quarter, he said.
Data this month on fixed-asset investment and factory production missed forecasts and gauges of manufacturing and service industries declined.
A measure of consumer goods, which includes Hengdeli and Belle International Holdings Ltd., had the biggest advance among the Hang Seng Composite Index’s 11 industry groups.
Hengdeli jumped 7.2 percent to HK$2.24 after China agreed to cut import duties on Swiss watches by 60 percent over 10 years as the countries seek to expand trade. Belle, the nation’s largest footwear retailer, rose 4.8 percent to HK$12.32 after finet.hk reported the company said May sales may have improved from a month earlier.
China Taiping Insurance surged 15 percent to HK$14.20, the biggest gain on the Hang Seng Composite Index. The company said it will buy 10.6 billion yuan ($1.7 billion) of assets from its parent, issuing up to 862.7 million shares at HK$15.39 apiece to fund the purchase.
China Gas Holdings Ltd. climbed 6.1 percent to HK$7.96 after saying it sees a “significant” increase in full-year net income, citing better-than-expected operating performance.
Futures on the S&P 500 advanced 0.8 percent today. The Conference Board’s index of U.S. consumer sentiment probably climbed this month to its highest level since November, while the S&P/Case-Shiller index of property values in 20 cities jumped the most since April 2006, data today is expected to show. U.S. markets were shut yesterday for a holiday.
Cosco Pacific gained 6.6 percent to HK$11.38, the biggest gain on the Hang Seng Index. Morgan Stanley raised its rating on the shares to overweight from equalweight.
First Pacific Drops
Among stocks that fell, First Pacific slumped 2.4 percent to HK$11.22. The investment manager said it will offer stockholders the right to buy one new share for every eight already owned at a 30 percent discount to yesterday’s close.
Zoomlion Heavy Industry Science and Technology Co., China’s second-largest construction equipment maker, said trading of its shares and bonds will be suspended in Shenzhen and Hong Kong while it checks data after a report on Internet portal Sina.com accused the company of falsifying sales.
Futures on the Hang Seng Index rose 1 percent to 22,866. The HSI Volatility Index slid 1.7 percent to 16.52, indicating traders expect a swing of 4.7 percent for the equity benchmark in the next 30 days.