Chinese Shares in Hong Kong Gain After Manufacturing Improves

Are Markets Showing Signs China is Stabilizing?
  • Official PMI unexpectedly rises to highest level since 2014
  • Traders cautious ahead of U.S. non-farm payrolls data

Chinese stocks in Hong Kong rose, led by financial companies, as improving manufacturing data boosted confidence in the nation’s economy. Macau casino operators climbed after gambling revenue in the city increased.

The Hang Seng China Enterprises Index gained 0.7 percent at the close, erasing an earlier loss of 0.7 percent. China Merchants Bank Co. rallied to the highest level since November. The nation’s official factory gauge unexpectedly climbed last month to the highest level in almost two years. Galaxy Entertainment Group Ltd. jumped the most since March after a slump in Macau’s gambling revenue came to an end in August. The Shanghai Composite Index fell 0.7 percent to a three-week low.

The manufacturing data extended a rally that made the H-share gauge the world’s best performer in August. Chinese stocks have come under pressure in recent days on concern the Federal Reserve will raise interest rates this year, boosting borrowing costs and weakening the yuan. U.S. jobs data due Friday could provide clues as to whether that policy tightening will come sooner rather than later, while investors are also awaiting the Group of 20 meeting in China this weekend.

“The PMI data were positive for China’s risky assets,” said Tim Condon, head of Asian research at ING Groep NV in Singapore. Even so, investors are “cautious about a September rate hike and tomorrow’s payrolls report could push the Fed to follow through.”

The Hang Seng China Enterprises Index rose to 9,606.08. The gauge’s 6.5 percent gain last month masked recent weakness, with the measure of Chinese companies traded in Hong Kong rising on only three of the previous 12 days. The Hang Seng Index added 0.8 percent as HSBC Holdings Plc advanced to the highest level since January.

China’s manufacturing purchasing managers index rose to 50.4 in August from July’s 49.9, beating the 49.8 median estimate of economists surveyed by Bloomberg. A PMI by Caixin Media and Markit Economics fell to 50 from 50.6 in July.

China Merchants Bank advanced 2.8 percent, extending a 14 percent rally in August, which was bolstered by higher first-half earnings. Bank of China Ltd. added 1.7 percent, rising for a third day, as the lender reported a 3.4 percent increase in profit on Tuesday even after setting aside extra loan-loss provisions. HSBC added 2.8 percent, the biggest contributor to the Hang Seng Index’s gains by points.

Gaming Stocks

Galaxy Entertainment and Sands China Ltd. jumped at least 6.4 percent after Macau reversed its 26-month slump in gaming revenue as new resorts attracted visits by gamblers and tourists. The industry’s gross gaming revenue rose 1.1 percent in August from a year ago, beating the median estimate of a 1.5 percent drop in a Bloomberg survey.

China Gas Holdings Co. sank 10 percent after the National Development and Reform Commission said it will strengthen supervision of natural gas distribution prices.

A measure of property shares led declines in Shanghai after jumping more than 12 percent in August for its biggest monthly increase since April 2015. Future Land Holdings Co. slumped 6.6 percent after rising the most in two weeks on Wednesday, while Poly Real Estate Group Co. retreated 4.1 percent.

The Shanghai Composite hasn’t moved more than 1 percent on a closing basis for more than two weeks, a far cry from the first half of the year when 2 percent daily swings were regular occurrences. Its drop on Thursday pushed a gauge of the price gap between dual-listed shares in the mainland and Hong Kong to the lowest level since October.

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