Hong Kong Stocks Rise on Factory Data; Sands China Drops
Hong Kong stocks rose, with the city’s benchmark index reaching a seven-week high, as U.S. durable goods orders climbed and investors weighed mainland industrial profits. Sands China Ltd. slid after an investor sold a $1.38 billion stake in the casino operator.
Yue Yuen Industrial Holdings Ltd. (551), a supplier of athletic shoes to U.S.-based Nike Inc., climbed 3.2 percent. Lenovo Group Ltd., the world’s No. 1 maker of personal computers, extended gains as China seeks to replace high-end servers from International Business Machines Corp. in the nation’s banks with domestic brands. Industrial & Commercial Bank of China Ltd., the nation’s biggest lender, gained 1.6 percent.
The Hang Seng Index added 0.6 percent to 23,080.03 in Hong Kong, the highest close since April 10. The gauge has closed higher than 23,000 twice this year only to fall back below that level, data compiled by Bloomberg showed. The Hang Seng China Enterprises Index, also known as the H-share index, advanced 1.1 percent to 10,198.02.
“After consolidating earlier this week, the Hang Seng Index (HSI) has broken through the psychological-resistance level at 23,000 points, supported by positive data from China,” Linus Yip, a strategist at First Shanghai Securities in Hong Kong, said by phone. “While overall growth in China has slowed, we’re beginning to see some signs of stability.”
Profit at China’s industrial companies rose 10 percent this year through April from the same period in 2013, compared with a 10.1 percent gain in the three months through March, data showed today.
The Hang Seng Index rose 4.3 percent this month, the second-best performer among major developed markets tracked by Bloomberg. The H-share index traded at 7.1 times estimated earnings today, the lowest among major equity gauges in Asia, data compiled by Bloomberg show. That compares with 10.7 times for the Hang Seng Index and 16.2 on the S&P 500 yesterday, the data show.
“China’s 7.5 percent growth target looks achievable as data suggest more stability,” Desmond Chua, a strategist at CMC Markets in Singapore, said by phone. “We may see a short-term correction for the Hang Seng Index as we’ve seen a sharp bounce this month.”
Futures on the U.S. equity benchmark added 0.1 percent today. The underlying gauge yesterday extended its record climb after durable goods orders rose for a third month in April. The Conference Board’s index of U.S. consumer confidence increased to 83 in May from 81.7 a month earlier, the New York-based private research group said.
Exporters climbed. Yue Yuen jumped 3.2 percent to HK$24.35. FIH Mobile Ltd. (2038), the handset assembler that counts Nokia Oyj and Apple Inc. among its customers, rose 2.4 percent to HK$4.26.
Chinese technology companies rallied after the government started reviewing whether local banks’ reliance on high-end servers from IBM compromises the country’s financial security, according to people familiar with the matter who asked not to be identified as the review hasn’t been made public. This comes a week after U.S. prosecutors indicted five Chinese military officers for allegedly stealing secrets by hacking computers at American companies.
Lenovo added 1 percent to HK$9.84, rising a seventh day for the longest winning streak since October 2003. Inspur International Ltd., whose parent company supplied servers to China Postal Savings Bank Co. as part of a trial program that began in March 2013, surged 9.9 percent to HK$1.67 after jumping 9.4 percent yesterday.
Chinese lenders gained. ICBC rose 1.6 percent to HK$5.04. China Construction Bank Corp. (939), the nation’s second-biggest lender, gained 1.4 percent to HK$5.68. Agricultural Bank of China Ltd. added 1.5 percent to HK$3.44.
Retailers extended losses on speculation a potential curb on tourist arrivals from China announced yesterday may put pressure on the earnings and asset values of shopping-mall operators and retailers in the city. Hong Kong may need take steps to slow gains in tourist arrivals as an influx of mainland visitors stokes discontent, city Chief Executive Leung Chun Ying told reporters yesterday.
Belle International Holdings Ltd., a seller of women’s shoes, slipped 3.2 percent to HK$7.80. Anta Sports Products Ltd., which sells athletic apparel, slipped 2.1 percent to HK$11.46. Hengdeli Holdings Ltd. (3389), the Chinese retail partner of Swatch Group AG, fell 3.3 percent to HK$1.45.
Sands China fell 2.1 percent to HK$57.05 in Hong Kong. Waddell & Reed Advisors Asset Strategy Fund, Ivy Asset Strategy Fund and Ivy Funds Asset Strategy VIP sold their holdings in Sands China for a stake in the casino operator’s parent, Las Vegas Sands Corp.
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