Hong Kong stocks rose, with the benchmark index gaining the most in more than two weeks, on positive earnings reports and as energy producers climbed after oil prices gained on concern the U.S. may lead military action against Syria.
China Oilfield Services Ltd., a contractor for the nation’s offshore energy industry, added 3.1 percent after crude yesterday climbed to a two-year high. China Merchants Holdings International Co. surged 9.7 percent after the port operator’s profit improved. PetroChina Co. and Kunlun Energy Co. rebounded from yesterday’s plunge after PetroChina said it would ensure its subsidiary’s stability amid antigraft investigations.
The Hang Seng Index rose 0.8 percent to 21,704.78 at the close in Hong Kong, its biggest gain since Aug. 13. About five shares rose for each that fell on the 50-member gauge, which is headed for a 0.8 percent monthly drop ahead of expected cuts to U.S. stimulus. The Hang Seng China Enterprises Index today added 0.9 percent to 9,850.72.
“The market is still waiting for a lot of things to happen so this is just a technical rebound,” said Benjamin Tam, a Hong Kong-based portfolio manager at IG Investment Ltd., which oversees about $1.5 billion. “There are many more earnings announcements to come in the next couple days.”
Hong Kong’s equity benchmark retreated 4.2 percent this year, the worst performer among developed markets tracked by Bloomberg. The gauge traded at 10.4 times estimated earnings, compared with 14.8 for the Standard & Poor’s 500 Index and 13.7 on the Stoxx Europe 600 Index yesterday, according to data compiled by Bloomberg.
The Hang Seng China Enterprises Index, also known as the H-share index, dropped 19 percent from a Feb. 1 high after China’s growth slowed for two quarters. The measure traded at 1.18 times book value, compared with a five-year average of 1.77.
Futures on the S&P 500 gained 0.3 percent. The measure rebounded yesterday from an eight-week low as energy shares jumped after West Texas Intermediate crude rose to its highest since May 2011. The U.S. and the U.K. yesterday said they are prepared to strike Syria without authorization from the United Nations over the regime’s alleged use of chemical weapons against its own people.
A measure of energy companies was the biggest contributor to the Hang Seng Composite Index’s advance. China Oilfield Services added 3.1 percent to HK$19.70.
Of the 39 companies on the broader Hang Seng Composite Index that have reported earnings since July 1 and for which Bloomberg has estimates, 20 have exceeded expectations. Seventeen companies missed projections while two were in line.
China Merchants jumped 9.7 percent to HK$25.45, the steepest gain on the Hang Seng Index, after first-half net income climbed 10 percent to HK$1.94 billion ($250 million) from a year earlier.
China Mengniu Dairy Co., the country’s largest producer of milk products, jumped 6.4 percent to HK$31.75. First-half earnings rose as tie-ups with foreign producers helped reassure customers its milk was safe. Net income climbed to 749.5 million yuan from 644.7 million yuan ($122 million from $105 million) a year earlier, the dairy said in a filing to Hong Kong’s bourse yesterday.
Sino Land Co., a developer that derives all its earnings from Hong Kong, added 3.4 percent to HK$10.46 after full-year underlying profit rose 25 percent on property sales and rental income.
Agricultural Bank of China Ltd., the nation’s third-largest lender by market value, climbed 2.1 percent to HK$3.36. The company reported a 22 percent increase in second-quarter profit as it set aside less money for bad loans, while lending and fee income increased.
Among stocks that fell, China Rongsheng Heavy Industries Group Holdings Ltd. plunged 4.2 percent to 92 Hong Kong cents. The shipbuilder, which is seeking state aid amid a slump in vessel orders, said it’s pursuing alternative sources of funding after swinging to a 1.26 billion-yuan loss. The company recorded profit of 215.8 million yuan a year earlier.
G-Resources Group Ltd. tumbled 14 percent to 27.5 Hong Kong cents. The gold miner said it plans to raise at least HK$1.21 billion by offering two shares for every five existing. The stock also slid as gold prices fell after a five-day rally.
PetroChina and Kunlun Energy climbed after each slumped at least 4.4 percent yesterday. Shares were suspended on Aug. 27 amid a wider drive against official corruption in China. PetroChina said three senior managers, including Kunlun Chairman Li Hualin, had resigned and another was ousted. The executives were under investigation for “serious discipline violations,” according to the official Xinhua News Agency.
The shares rebounded after PetroChina said subsidiary Kunlun Energy’s business positioning will remain unchanged. PetroChina, the nation’s largest company by market value, gained 1.8 percent to HK$8.42. Its unit added 2.6 percent to HK$11.16.
Investors will be watching as a report today that may show the U.S. economy grew more last quarter than previously estimated, adding to expectations the Federal Reserve may start slowing the flow of stimulus next month. Economists surveyed by Bloomberg project gross domestic product expanded 2.2 percent, up from the earlier official forecast of 1.7 percent.
Speculation the Fed will cut bond buying has weighed on equities in recent weeks. The central bank is expected to pare asset purchases in September by $10 billion to a $75 billion monthly pace, according to economists surveyed by Bloomberg on Aug. 9-13.
Hang Seng Index futures rose 0.8 percent to 21,560. The HSI Volatility Index fell 4.7 percent to 19.76, indicating traders expect a swing of 5.7 percent on the benchmark equity gauge over the next 30 days.