Hong Kong stocks rose, with the benchmark index paring its quarterly decline, as investors weighed earnings reports. Cnooc Ltd. dropped after profit fell.
China Construction Bank Corp., the nation’s second-largest lender by market value, and China Railway Group Ltd., the country’s No. 2 builder of train lines, each rose at least 1.3 percent after profits beat estimates. Cnooc, China’s biggest offshore oil and natural-gas explorer, dropped 5.4 percent. Huaneng Renewables Corp. sank 7.7 percent after Deutsche Bank AG cut its price target for the alternative-energy company.
The Hang Seng Index added 0.4 percent to 22,151.06 at the close in Hong Kong, paring its monthly decline to 3 percent and quarterly drop to 5 percent. The Hang Seng China Enterprises Index, also known as the H-share index, increased 0.7 percent to 10,075.10 after surging 6.1 percent last week, its best such advance since November.
“Investors are focused on individual companies’ earnings today,” said Mari Oshidari, a Hong Kong-based strategist at Okasan Securities Group Inc. “There’s a good chance China will introduce more stimulus, but it probably won’t happen soon and the market may be in for a disappointment. Investors’ concerns about the economy haven’t disappeared.”
The benchmark Hang Seng Index is the second-worst performer among developed markets this year as the mainland economy shows further signs of slowdown. The measure traded at 10.1 times estimated earnings today, compared with 15.9 for the Standard & Poor’s 500 Index at the end of last week.
China is expected to roll out specific growth-supportive policies, analysts led by Lu Ting at Bank of America Corp. wrote in a note dated March 28 after Premier Li Keqiang said the nation can’t ignore “difficulties and risks” from increasing downward pressure. The official expansion target for this year is 7.5 percent, although investment banks including Goldman Sachs Group Inc. and UBS AG have projected lower growth.
China’s short-term bond yields are sliding at the fastest pace in five years as speculation builds that monetary policy will be relaxed. The yield on the government’s two-year bonds tumbled 93 basis points this quarter to 3.41 percent, ChinaBond data show.
China Construction Bank rose 1.3 percent to HK$5.43 after posting fourth-quarter profit that climbed 9 percent to 38.2 billion yuan ($6.1 billion) from a year earlier, based on full-year figures it released yesterday. That compared with the 36.9 billion yuan average estimate of 25 analysts surveyed by Bloomberg.
China Railway Group rose 2.3 percent to HK$3.61 after full-year profit jumped 27 percent to 9.38 billion yuan, exceeding estimates for a 8.84 billion-yuan gain. Shandong Weigao Group Medical Polymer Co. jumped 6.8 percent today to lead gains on the H-share index as the company rebounded from last week’s 10 percent loss.
Intime Retail Group Co. dropped 7.5 percent to HK$8.35. The company said it will issue 220.5 million shares at HK$7.5335 each and HK$3.7 billion in convertible bonds to Alibaba Investment Ltd. The stock earlier surged 17 percent after saying it will receive an investment of about $692 million from Alibaba Group Holding Ltd.
Huaneng Renewables retreated 7.7 percent to HK$2.63. Deutsche Bank cut its price target to HK$3 from HK$3.50, while Jefferies Hong Kong Ltd. reduced its projection to HK$3.60 from HK$4.30. The company may need to place shares as existing projects may not be enough to fund its “aggressive” expansion plan, Jefferies wrote in a note dated March 28.
Cnooc plunged 5.4 percent to HK$11.66, its biggest drop in almost two months. The stock fell the most on the Hang Seng Index after reporting net income fell 11 percent to 56.5 billion yuan last year from 63.7 billion yuan in 2012 amid higher costs and lower crude prices. The energy company said it will increase capital expenditure 31 percent in 2014.
Futures on the S&P 500 rose 0.3 percent. The gauge gained 0.5 percent on March 28 as consumer shares rebounded amid data showing household purchases rose in February by the most in three months.
China is expected to report tomorrow that its manufacturing Purchasing Managers’ Index slid to 50.1 in March from 50.2 the previous month, according to the median estimate in a Bloomberg News survey. HSBC Holdings Plc and Markit Economics Ltd. are also scheduled to release final data on factory activity for the month after preliminary figures showed a third month of contraction. Readings above 50 signal expansion.