Hong Kong Stocks Rise on Easing Greek Concern; HSBC Advances
Hong Kong’s Hang Seng Index advanced for the first time in six days as concern eased that Greece will default on its debt after Luxembourg’s Jean-Claude Juncker said a solution to the crisis will be found.
HSBC Holdings Plc (HSBA), Europe’s biggest bank by market value, rose 1.7 percent. PetroChina Co., the nation’s largest energy company, increased 1.8 percent after crude oil prices rose. China National Material Building Co. led a rally in cement suppliers after Shanghai Securities News said local governments will be allowed to sell bonds to fund public-housing projects.
The Hang Seng Index gained 1.2 percent to 21,850.59 at the 5 p.m. close in Hong Kong, the biggest advance this month. Eight stocks rose for each that retreated on the 46-member gauge. The Hang Seng China Enterprises Index of Chinese companies’ H shares increased 1.2 percent to 12,148.74.
“We’re seeing a bit of bounce as some investors are covering short positions,” said Andrew Sullivan, director of institutional sales trading at OSK Securities Hong Kong Ltd. “Stocks could still go lower from current levels as people turn cautious ahead of the U.S. housing data tonight and a Federal Open Market Committee meeting tomorrow.”
U.S. data due tonight may show sales of previously owned homes declined 5 percent in May from April, according to forecasts by economists surveyed by Bloomberg. The U.S. Federal Reserve is expected to keep unchanged a pledge to hold interest rates low for an “extended period” and isn’t likely to undertake a new round of quantitative easing at a two-day meeting that ends tomorrow.
The benchmark Hang Seng Index (HSI) last week entered a so-called correction from its April high, tumbling more than 10 percent, on concern faltering U.S. economic growth and Greece’s worsening sovereign debt crisis will derail the global economic recovery. Shares in the gauge traded at 11.7 times forecast earnings on average at yesterday’s close, the lowest level since March 2009, according to data compiled by Bloomberg.
Juncker, head of the euro-region finance ministers group, said yesterday Greek Prime Minister George Papandreou assured him the government would do everything to ensure financial aid before a confidence vote in Greece’s parliament today.
“Greece’s debt problems are unlikely to be resolved anytime soon,” OSK Securities’ Sullivan said. “EU’s finance ministers have put the ball back into Greece’s court. The government recognizes the issue, but the people don’t.”
HSBC gained 1.7 percent to HK$76.75. Standard Chartered Plc (2888), a U.K.-based bank that makes three-quarters of its profit in Asia, rose 0.9 percent to HK$196.30. Cosco Pacific Ltd. (1199), which operates container facilities at Greece’s Piraeus port, advanced 1.6 percent to HK$13.60.
PetroChina increased 1.8 percent to HK$11.08. Cnooc Ltd. (883), the nation’s biggest offshore oil producer, added 1 percent to HK$18.08. Oil advanced for a second day in New York as concern eased that Greece will default and disrupt the region’s economy, and before a report that may show U.S. crude stockpiles dropped for a third week.
Cement producers in China rallied after the Shanghai Securities News reported local governments will be allowed by the National Development and Reform Commission to sell bonds to fund the construction of affordable housing.
Anhui Conch Cement Co., the No. 1 supplier of the building material, increased jumped 7.1 percent to HK$33.40. Smaller rival China National Building surged 7.5 percent to HK$13.52.
Hengan International Group Co., a maker of personal hygiene products, climbed 1.8 percent to HK$69.10. Yuanta Financial rated the stock “buy” with a share price forecast of HK$82 in new coverage.
Galaxy Entertainment Group Ltd. (27), the Macau casino operator partly owned by Permira Advisers LLP, jumped 5 percent to HK$15.02 after saying Permira is not in talks to sell its shares in the company. The stock slumped 11 percent through yesterday after Bloomberg reported on June 14 that the leverage-buyout fund manager may sell its $1.7 billion stake in Galaxy.
Among stocks that dropped, China Construction Bank Corp. (939), the nation’s second-biggest lender by market value, sank 2.3 percent to HK$6.44. Bank of America Corp. may sell part of its $21 billion stake in the Chinese lender to bolster capital before new international standards take effect, three people briefed on the plans told Bloomberg.
O-Net Communications Group Ltd. (877), a supplier of components used in high-speed telecommunications, slumped 9.3 percent to HK$2.53. The company said its first-half net profit will fall from a year earlier on lower gross profit margins and higher research expenses.
Futures on the Hang Seng Index rose 1 percent to 21,835. The HSI Volatility Index, the benchmark gauge for Hong Kong stock options, dropped 4.8 percent to 21.42, indicating options traders expect a swing of 6.1 percent in the Hang Seng Index in the next 30 days.
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