Hong Kong stocks rose, with the benchmark capping its biggest weekly gain since November as a drop in U.S. jobless claims boosted confidence in the world’s largest economy and after China’s money-market rates posted the biggest weekly drop since February.
Yue Yuen Industrial (Holdings) Ltd., a shoemaker that gets about 29 percent of sales from the U.S., rose 1 percent. Tencent Holdings Ltd., Asia’s largest Internet company, gained 3 percent to lead gains on the Hang Seng Index. Guangzhou Automobile Group Co., a Toyota Motor Corp. partner, slumped 5.2 percent amid concern tension will escalate after Japan’s prime minister visited a controversial war shrine.
The Hang Seng Index rose 0.3 percent to 23,243.24 at the close in Hong Kong, capping a 1.9 percent weekly gain. About five stocks gained for each four that declined on the 50-member gauge today on volume half the 30-day average. The Hang Seng China Enterprises Index, also known as the H-share index, was little changed at 10,830.10 as Hong Kong’s market reopened from a two-day holiday. China’s Shanghai Composite Index jumped 1.4 percent today.
“The U.S. data is giving a psychological support to the market,” said Louis Tse, a Hong Kong-based director at VC Brokerage Ltd. “It’s also supported by gains in the mainland market. In China, most of the investors are domestic and retail, making the market more volatile because of herd instinct.”
Futures on the Standard & Poor’s 500 Index dropped 0.1 percent today after the equity gauge climbed 0.5 percent yesterday to extend an all-time high. Jobless claims declined by 42,000 to 338,000 in the week ended Dec. 21, a Labor Department report showed yesterday. The median forecast of 42 economists surveyed by Bloomberg called for a drop to 345,000.
Yue Yuen gained 1 percent to HK$25.35, while AAC Technologies Holdings Inc., a maker of acoustic components that gets more than half its revenue from the U.S., gained 2.1 percent to HK$38.40.
The Hang Seng Index climbed 17 percent from its June low amid signs China’s economy is stabilizing and the U.S. recovery gains momentum. The measure traded at 11.07 times estimated earnings, compared with 16.72 for the S&P 500 yesterday. The H-share index climbed 22 percent from its June 25 low this year.
China’s government reported today that industrial companies’ profits rose 9.7 percent from a year earlier in November, compared with a 15.1 percent jump in October.
“The U.S. data is giving the market a little bit of support,” said Francis Lun, chief executive officer of GEO Securities Ltd. “Otherwise investors are mainly concerned about data from China. The market will do well if the Hang Seng Index can hang on to 23,000 at the end of 2013.”
The H-share index is headed for its first monthly loss since June as funding costs soared in China. The gauge pared losses on Dec. 24 after the People’s Bank of China conducted its first reverse-repurchase agreements in three weeks, helping ease the tightest financing conditions since a record cash crunch in June.
The Shanghai Composite Index jumped after the seven-day repurchase rate, a gauge of funding availability in the banking system, slid 24 basis points to 5.09 percent today and headed for the steepest weekly decline in more than two years.
“Lending costs went down a little bit in China but that doesn’t change investors’ perspective that liquidity is relatively on the tight side,” said Jackson Wong, vice president of Tanrich Securities in Hong Kong. “China is still under tremendous liquidity crunch and pressure. There’s still no support or confidence for A-shares.”
Chinese carmakers fell as Japan’s Abe drew criticism from China and South Korea for his visit yesterday to Yasukuni, where a number of convicted war criminals are among the enshrined war dead. Guangzhou Automobile slid 5.2 percent to HK$8.39. The company gets 80 percent of its sales volume and majority of its profit from joint ventures with Toyota and Honda Motor Co., according to Phillip Securities (HK) Ltd. Dongfeng Motor Group Co., which makes vehicles with Nissan Motor Co., sank 4.4 percent to HK$12.12.
Futures on the Hang Seng Index rose 0.3 percent to 23,273. The Hang Seng Volatility Index gained 2.1 percent to 14.84, indicating traders expect the benchmark equity index to swing 4.3 percent in the next 30 days.