Hong Kong Stocks Advance on China Manufacturing Report
Hong Kong stocks rose, with the benchmark equity index capping its biggest advance in three weeks, after China’s official Purchasing Managers’ Index of manufacturing activity climbed to a 16-month high.
Jiangxi Copper Co. (358), China’s biggest producer of the metal, rose 1.7 percent. China Railway Construction Corp. increased 3.4 percent after the track builder’s first-half profit jumped. Galaxy Entertainment Group Ltd., a casino operator controlled by billionaire Lui Che-woo, surged 4.1 percent after Macau’s August gaming revenue topped estimates.
The Hang Seng Index added 2 percent to 22,175.34 at the close in Hong Kong, its steepest gain since Aug. 12. All but four shares on the 50-member gauge advanced, with volume 25 percent higher than the 30-day average. The Hang Seng China Enterprises Index (HSCEI) rose 2.3 percent to 10,055.05. Shares also climbed on diminished prospects for a U.S. strike on Syria.
“The official PMI is confirming the end of deceleration in China’s economy and signaling a mild recovery,” said Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management Ltd., which manages about $57 billion. “Today’s market is also influenced by Middle East situation as well, that there wasn’t an attack on Syria.”
China’s factory activity is showing signs of strength after the PMI beat estimates by rising to 51.0. Separate data by HSBC Holdings Plc and Markit Economics today came in at 50.1 in August, with a reading above 50 indicating expansion.
Jiangxi Copper gained 1.7 percent to HK$15.20. Zoomlion Heavy Industry Science and Technology Co., China’s second-largest construction equipment maker, climbed 4.2 percent to HK$6.29.
The Hang Seng Index (HSI) was the second-worst performer this year among developed markets tracked by Bloomberg. The gauge traded at 10.6 times estimated earnings, compared with 14.8 for the Standard & Poor’s 500 Index.
China Railway Construction climbed 3.4 percent to HK$7.63, and China Railway Group Ltd. (390), the country’s No. 2 train-line builder, rose 0.5 percent to HK$4, after their first-half profits each rose at least 46 percent from a year earlier.
The Hang Seng China Enterprises Index, also known as the H-share index, dropped 18 percent from a Feb. 1 high after mainland growth slowed for two quarters. The measure traded at 1.21 times book value, compared with a five-year average of 1.77.
Materials and energy companies led declines this year on the Hang Seng Composite Index amid concern weaker expansion in China will sap demand. Utility and information-technology shares were the biggest gainers.
Galaxy Entertainment jumped 4.1 percent to HK$49.15. Sands China Ltd. (1928), a unit of billionaire Sheldon Adelson’s Las Vegas company, gained 4.3 percent to HK$46.50. Macau casino revenue rose 18 percent from a year earlier to 30.7 billion patacas ($3.84 billion), according to data published on the website of the city’s Gaming Inspection & Coordination Bureau, beating the 30.1 billion patacas estimated by analysts.
“There is further upside potential for the persistently growing Macau gaming sector with gaming stocks having diverse performance in the next six months,” Credit Suisse Group AG analysts led by Kenny Lau wrote in a report dated Aug. 30.
Metallurgical Corp. of China surged a record 12 percent to HK$1.53, the biggest gain on the Hang Seng Composite Index. The state-owned miner swung to a first-half profit from a loss a year earlier.
Futures on the S&P 500 added 0.9 percent today. The benchmark gauge capped its worst monthly drop since May 2012 in New York last week as investors weighed the prospects for American military action in Syria and disappointing data on consumer spending. The markets are closed today for a holiday.
U.S. President Barack Obama said on Aug. 31 that he’ll seek approval from Congress before ordering a strike against Syria for its alleged use of chemical weapons against civilians. U.K. Prime Minister David Cameron lost a parliamentary vote on military action last week.
Consumer confidence in the U.S. dropped in August from a six-year high as interest rates rose and tensions in the Middle East intensified. The Thomson Reuters/University of Michigan final index of consumer sentiment fell to a four-month low of 82.1 from 85.1 in July.
Among stocks that fell, China Everbright Ltd. slid 3.6 percent to HK$10.06 as Everbright Securities Co. plunged by the 10 percent daily limit in Shanghai after errant trades drew a record penalty from a markets regulator. China Everbright holds a third of shares in the brokerage.
Hang Seng Index futures gained 2.7 percent to 22,157. The HSI Volatility Index fell 4.1 percent to 18.28, indicating traders expect a swing of 5.2 percent on the benchmark equity gauge over the next 30 days.
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