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Hong Kong Stocks Rise Before Fed Meeting, China Gas Jumps

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Oct. 29 (Bloomberg) -- Hong Kong stocks advanced for a second day as investors await the outcome of a two-day Federal Reserve policy meeting and after China’s central bank added funds to the financial system for the first time in two weeks.

Techtronic Industries Co., a maker of power tools that gets about 73 percent of sales from North America, rose 1.3 percent. Industrial & Commercial Bank of China Ltd. gained 2.7 percent, pacing an advance among Chinese lenders. China Gas Holdings Ltd., which supplies natural gas in Asia’s biggest economy, jumped 4.4 percent after projecting higher first-half profit.

The Hang Seng Index added 0.2 percent to 22,846.54 at the close, erasing losses of as much as 0.2 percent. Almost three shares rose for each that fell on the 50-member gauge. The Hang Seng China Enterprises Index of mainland companies traded in the city climbed 1.3 percent to 10,390.56. The Federal Open Market Committee begins a two-day meeting today.

“Softer economic data from the U.S. support the market view that the Federal Reserve will delay stimulus tapering and that’s helped to boost sentiment,” said Jackson Wong, vice president of Hong Kong-based brokerage Tanrich Securities Co. “The capital injection by China’s central bank also calmed the market a little bit.”

Factory production in the U.S. rose less than forecast in September and contract signings for home purchases fell the most in three years, reports showed yesterday, adding to weaker economic data for the Fed to consider as it decides on a timeframe for cutting its $85 billion in monthly bond purchases.

Reverse Repos

The People’s Bank of China today conducted 13 billion yuan ($2.1 billion) of seven-day reverse repurchase agreements, according to a trader at a primary dealer required to bid at the auctions.

“That’s encouraged people that China isn’t going to tighten too far,” Andrew Sullivan, director of sales trading at Kim Eng Securities in Hong Kong, said by phone. “There’s a lot of nervousness out there at the moment. If the global economy is still slowing down, then that’s not good for everybody.”

China’s seven-day repurchase rate dropped as much as 20 basis points, or 0.2 percentage point, to 4.8 percent today before rebounding to 5.04 percent as of 4:10 p.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. It touched 5.06 percent on Oct. 25, the highest since July.

Cash Injections

The monetary authority suspended sales of the reverse repo contracts on Oct. 17 after offering seven- or 14-day agreements at twice-weekly auctions for more than three months. The Hang Seng Index fell 1.3 percent from Oct. 17 through yesterday, while the MSCI Asia Pacific Index was little changed.

Hong Kong’s benchmark equity gauge traded at 10.9 times estimated earnings today, compared with 15.9 for the Standard & Poor’s 500 Index yesterday.

Futures on the S&P 500 fell less than 0.1 percent today. The U.S. equity gauge rose 0.1 percent yesterday as weaker-than-forecast economic data fueled bets the Fed will maintain monetary stimulus.

The Fed is likely to delay reducing its monthly bond purchases until March, according to a Bloomberg News survey of economists conducted Oct. 17-18. The FOMC surprised investors last month by maintaining its unprecedented level of stimulus even as a separate Bloomberg survey indicated the central bank was likely to taper.

Exporters Rise

Exporters gained. Techtronic added 1.3 percent to HK$19.10. Yue Yuen Industrial Holdings Ltd., a maker of shoes for Nike Inc., climbed 1.7 percent to HK$21.45. Li & Fung Ltd., a supplier of toys and clothes to retailers including Wal-Mart Stores Inc., rose 0.6 percent to HK$10.82.

Chinese lenders and developers advanced. ICBC, as China’s biggest bank is known, jumped 2.7 percent to HK$5.34. China Construction Bank Corp. gained 2.1 percent to HK$5.89. China Overseas Land & Investment Ltd., the largest mainland real estate company traded in Hong Kong, added 1.1 percent to HK$23.65. Shimao Property Holdings Ltd., controlled by billionaire Hui Wing Mau, jumped 5.1 percent to HK$18.70.

China Gas rose 4.4 percent to HK$8.87, the highest close since Aug. 5, after saying it expects a “significant” increase in profit for the six months ended September.

Macau casino operators dropped after Credit Suisse Group AG said gaming stocks are at risk of a correction following this year’s rally. Galaxy Entertainment Group Ltd., the best performer on the Hang Seng Index this year, fell 3.3 percent to HK$56.20. Sands China Ltd., the Macau casino operator controlled by billionaire Sheldon Adelson, slipped 3.2 percent to HK$53.85.

Tencent Holdings Ltd., Asia’s biggest Internet company, declined 3.4 percent to HK$418.40, tracking losses yesterday among Chinese Internet companies traded in the U.S., where NQ Mobile Inc. plunged after Muddy Waters LLC accused it of fabricating revenue and Sohu.com Inc. tumbled on plans to boost marketing expenses.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net

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