Hong Kong Stocks Swing Ahead of Fed on China Growth Vow
Hong Kong stocks swung between gains and losses after Chinese policy makers pledged to stabilize growth and as investors awaited the outcome of the Federal Reserve’s policy meeting.
China Resources Land Ltd. (1109), the second-biggest mainland developer traded in Hong Kong, rose 5.8 percent on speculation the government may ease property curbs. Huaneng Power International Co. gained 2.1 percent after saying net income more than doubled. China Life Insurance Co. gained 2.1 percent on expectations first-half profit may surge. Li & Fung Ltd., a supplier of toys and clothes to Wal-Mart Stores Inc., slumped 1.1 percent.
The Hang Seng Index rose 0.2 percent to 21,997.17 as of 10:42 a.m. in Hong Kong after falling as much as 0.3 percent. The gauge is poised for a 5.7 percent gain this month, the biggest since September. About two stocks climbed for each that declined today on volume 26 percent lower than the 30-day intraday average. The Hang Seng China Enterprises Index of mainland companies gained 0.5 percent to 9,716.52.
“Market sentiment remains cautious ahead of the Fed meeting,” said Ben Kwong, chief operating officer at KGI Asia Ltd. Still, China policymakers’ comments on stable growth means “the central leadership is closely monitoring the situation and the market believes there will be more policies coming if things worsen.”
The Hang Seng Index fell 3.1 percent this year through yesterday, the second-worst performance among developed markets tracked by Bloomberg, as shares slid on weaker growth in China and concern the Federal Reserve will taper stimulus. The gauge yesterday traded at 10.5 times estimated earnings, compared with 15.3 for the Standard & Poor’s 500 Index.
Materials and energy companies led declines this year on the Hang Seng Composite Index on concern demand will weaken amid slower growth in China’s economy. Official data due tomorrow is expected to show a contraction in mainland manufacturing.
Futures on the S&P 500 rose 0.1 percent today. The U.S. equity gauge gained less than 0.1 percent yesterday as investors weighed earnings reports and awaited results from the Federal Reserve’s two-day policy meeting. Home prices rose in May by the most in more than seven years as the recovery in the U.S. property market gained momentum.
The Federal Open Market Committee, which has said it may start paring stimulus should the U.S. economy meet the central bank’s forecasts, concludes its two-day meeting today. Policy makers will begin to reduce the central bank’s $85 billion of monthly bond purchases in September, a Bloomberg survey shows.
The Hang Seng China Enterprises Index, also known as the H-share index, has fallen 21 percent from a Feb. 1 high through yesterday, meeting some investors’ definition of a bear market. The measure traded at 1.17 times the value of net assets yesterday, 34 percent lower than its five-year average of 1.78.
Hang Seng Index (HSI) futures increased 0.2 percent to 21,994. The HSI Volatility Index dropped 2.3 percent to 17.36, indicating traders expect a swing of 5 percent for the equity benchmark in the next 30 days.
To contact the reporter on this story: Kana Nishizawa in Hong Kong at firstname.lastname@example.org
To contact the editor responsible for this story: Nick Gentle at email@example.com