Hong Kong stocks climbed, with the benchmark equity index rebounding from two days of declines, after U.S. labor data beat estimates and China’s government said fiscal funds should be used to stabilize economic growth.
HSBC Holdings Plc, a lender that gets a fifth of its revenue from North America, added 1.6 percent. China Petroleum & Chemical Corp., the nation’s largest refiner, rose 2.5 percent after oil prices surged amid unrest in Egypt. Biostime International Holdings Ltd., a supplier of infant formula, tumbled by the most on record after competitors said they will cut prices.
The Hang Seng Index increased 1.6 percent to 20,468.67 at the close, with only three stocks falling on the 50 member gauge. Trading volume on the measure was 36 percent lower than its 30-day intraday average, according to data compiled by Bloomberg. The Hang Seng China Enterprises Index of mainland companies climbed 1.4 percent to 9,024.01.
“Investors are regaining confidence that the U.S. economy may not be so bad,” said Jackson Wong, vice president of Hong Kong-based brokerage Tanrich Securities Co. “Before, everyone was betting on China to boost growth. Now the focus is shifting back to the U.S.” The Hong Kong market has been oversold and investors are seeking to recoup losses, he said.
The Hang Seng Index posted its biggest monthly decline in in a year in June, dropping 7.1 percent as China’s money-market rates surged to a record and Federal Reserve Chairman Ben S. Bernanke said stimulus may be dialed down if the U.S. economy shows sustained improvement.
Shares on the benchmark gauge traded at 9.7 times estimated earnings, compared with multiples of 14.66 for the Standard & Poor’s 500 Index and 12.75 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
The Hang Seng China Enterprises Index, also known as the H-share index, capped its worst first half since 2008 last week. The gauge closed 26 percent below its Feb. 1 high, with the measure trading at 1.09 times the value of net assets, near levels last seen during the 2008 global financial crisis.
Just two of 11 industries on the Hang Seng Composite Index have advanced this year. Materials and energy companies led declines on signs China’s economic growth is slowing. Reports this week showed the country’s industrial expansion in manufacturing and services is losing pace as the government seeks to redirect the economy away from exports.
Chinese Premier Li Keqiang said fiscal funds should be used to redevelop shantytowns and improve basic infrastructure to stabilize the world’s second-largest economy. Money should be allocated to transform the structure of the economy to focus more on domestic consumption, the State Council said in a statement on its website yesterday.
China may post second-half economic growth of 7.6%, according to a State Information Center report published in China Securities Journal. Goldman Sachs Group Inc., China International Capital Corp., Barclays Plc and HSBC Holdings Plc last month pared their China growth projections for this year to 7.4 percent, below the government’s 7.5 percent goal.
Energy companies led gains on the Hang Seng Composite Index. West Texas Intermediate crude traded near the highest price in 14 months as U.S. stockpiles shrank the most this year and the ouster of Egypt’s president fanned concern unrest will disrupt Middle East oil supply.
China Petroleum added 2.5 percent to HK$5.25. Cnooc Ltd., China’s biggest offshore oil company, advanced 2.1 percent to HK$12.80.
Coal producers advanced, leading the Hang Seng Index higher. China Shenhua Energy Co., the nation’s biggest miner of the fuel by market value, jumped 5.5 percent to HK$19.22. China Coal Energy Co., the No. 2, increased 5.4 percent to HK$3.89, paring this week’s losses. The 14-day Relative Strength Index for the shares are are below 30, a level that some investors view as an oversold condition.
Developers also rebounded. China Resources Land Ltd., the second-biggest mainland developer traded in Hong Kong, gained 4.5 percent to HK$20.30. Agile Property Holdings Ltd., based in the city of Guangzhou, jumped 4.4 percent to HK$7.63 after a two-day, 12 percent slump.
Futures on the S&P 500 gained 0.3 percent with U.S. markets shut to celebrate the July 4 holiday. The equity gauge yesterday rose to the highest level in two weeks on better-than-estimated labor data as investors watched political developments in Portugal, where the splintering of the coalition government caused bond yields to surge, and in Egypt.
U.S. jobless claims decreased to 343,000 in the week ended June 29 from a revised 348,000 in the prior period that was higher than initially reported, the Labor Department said today in Washington. An official report tomorrow will probably show the nation added 165,000 jobs in June.
HSBC advanced 1.6 percent to HK$81.05. Semiconductor Manufacturing International Corp., a chip-services provider that gets half its revenue from North America, climbed 1.8 percent to 57 Hong Kong cents.
Li Ning Co., a sportswear company named after its Olympic gymnast founder, increased 3.7 percent to HK$3.92 on expectations its deal with NBA basketball star Dwyane Wade will boost its brand.
Belle International Holdings Ltd., the nation’s largest footwear retailer, climbed 6 percent to HK$10.56 after HSBC raised its rating to neutral from underweight. The bank also increased its target price to HK$10.66 from HK$9.64.
Among stocks that fell, Biostime International tumbled 17 percent to HK$31, its steepest two-day drop on record. Nestle SA and Danone SA said their infant-nutrition units will charge less in China after the government started investigating possible pricing and anti-monopoly violations.
Biostime dropped 34 percent since June 27 after saying one of its units was under investigation for suspect pricing of infant formula.
AAC Technologies Holdings Inc., an acoustic-components maker, slumped 4.5 percent to HK$40.50 after Jefferies Hong Kong Ltd. cut its rating to underperform from hold.
Hang Seng Index futures rose 1.2 percent to 20,410. The HSI Volatility Index slipped 5.9 percent to 23.13, indicating traders expect a swing of 6.6 percent for the equity benchmark in the next 30 days.
“The market will continue to be volatile,” said Lewis Wan, Hong Kong-based chief investment officer at Pride Investments Group Ltd. “I don’t expect there will be a solid rebound from the current levels, even though valuations have been very cheap.”