Hong Kong Stocks Snap Three-Day Loss on Greek Debt Swap Optimism
Hong Kong stocks rose, with the Hang Seng Index (HSI) snapping a three-day losing streak, after U.S. employers increased hiring and more investors joined a Greek debt swap, boosting demand for riskier assets.
Li & Fung Ltd. (494), a supplier of toys and clothes to Wal-Mart Stores Inc., gained 2.2 percent. Esprit Holdings Ltd. (330), a Hong Kong-based clothier that counts Europe as its biggest market, climbed 5.6 percent. Cheung Kong Infrastructure (1038) Holdings Ltd., the utilities owner controlled by billionaire Li Ka-shing, climbed 3 percent after posting higher profit.
“Greece is going to be OK for now,” Marino Valensise, who oversees about $67 billion as chief investment officer at Baring Asset Management Ltd., said on Bloomberg Television. “We have space for a rally. Any retreat will be bought as there’s still a lot of people who are underweight on risk.”
The Hang Seng Index advanced 1.3 percent to 20,900.73 as of the 4 p.m. close in Hong Kong. Volumes on the benchmark index fell to 1.6 billion shares, 10 percent less than 30-day moving average, data compiled by Bloomberg showed. The gauge advanced the past three months, its longest such winning streak in two years, as China cut bank reserve ratios and amid signs the U.S. economy is improving.
The Hang Seng China Enterprises Index of mainland companies, also known as the H-share Index, gained 1.8 percent to 11,168.50.
Options protecting against losses on the gauge cost the most since the collapse of Lehman Brothers Holdings Inc. when compared with contracts on U.S. stocks. The difference, or skew, shows investors are increasingly bearish on the shares after the index surged as much as 46 percent since October and China this week cut its target for economic growth.
Futures on the Standard & Poor’s 500 Index (SPXL1) added 0.3 percent today. The gauge advanced 0.7 percent in New York yesterday after ADP Employer Services reported U.S. companies added 216,000 workers in February. The report came two days before the Labor Department releases its monthly jobs data.
Li & Fung rose 2.2 percent to HK$17.42. Man Wah Holdings Ltd. (1999), a sofa maker that gets about half its sales from the U.S., rose 5.1 percent to HK$5.99. Techtronic Industries Co. (669), a power- tool maker that counts North America as its largest market, advanced 2.5 percent to HK$9.51.
Optimism about Greece’s debt swap helped drive stocks higher. Investors with at least 58 percent of the Greek bonds eligible for the nation’s debt swap have so far indicated they’ll participate, putting the country on the verge of the biggest sovereign restructuring in history.
Esprit gained 5.6 percent to HK$18.24, while China Rongsheng Heavy Industries Group Holdings Ltd. (1101), a shipmaker that gets about a third of its revenue from Greece and Germany, increased 1.2 percent to HK$2.53.
The Hang Seng Index has risen 13 percent this year. The rally boosted the price of shares on the gauge to 10.6 times estimated earnings. That compares with 13 times for the Standard & Poor’s 500 Index and 10.8 times for the Stoxx Europe 600 Index.
Cheung Kong Infrastructure climbed 3 percent to HK$46.90 after reporting profit increased 54 percent last year. Power Assets Holdings Ltd., a unit of the utilities operator, rose 2.3 percent to HK$58.75 after posting net income that beat estimates.
Futures on the Hang Seng expiring this month added 1.3 percent to 20,837. The HSI Volatility Index dropped 6 percent to 22.54, indicating options traders expect a swing of 6.5 percent in the benchmark index over the next 30 days.
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