Hong Kong Stocks Snap Four-Day Loss Streak; Casinos SlumpKana Nishizawa
Hong Kong stocks rose, with the city’s benchmark rising for the first time in five days, after China’s government approved a plan to tackle the wealth gap and increase minimum wages. Casino shares slumped after a report China may crack down on junket operators.
Chow Sang Sang Holdings International Ltd., a jewelry retailer, gained 3 percent. Kingway Brewery Holdings Ltd. surged 7 percent after SABMiller Plc’s joint venture in China agreed to buy its brewery assets. Automakers rose after a report China’s passenger car sales increased last month. Sands China Ltd., a Macau casino operator, dropped 5.2 percent, to lead gaming shares lower. Digital China Holdings Ltd. was suspended from trading after the electronics distributor slumped 13 percent.
The Hang Seng Index climbed 0.5 percent to close at 23,256.93 after yesterday posting its biggest drop since Nov. 8. Almost three stocks advanced for each that declined. The Hang Seng China Enterprises Index of mainland companies gained 0.3 percent to 11,849.25.
“Overall for China we are seeing a much more comprehensive growth returning to the economy,” Tai Hui, Hong Kong-based chief market strategist for Asia at JPMorgan Asset Management, said on Bloomberg Television. “The global macro environment has become more stable and the growth environment in Asia is starting to pick up. Combined with relatively attractive valuations, it gives us confidence that equities will perform well in 2013.”
Hong Kong’s market will be shut for three days next week for the Lunar New Year holidays, while markets in mainland China will be closed for the whole week. The Hang Seng Index rose for a fifth straight month in January, the longest such streak since July 2009, as central banks around the globe added stimulus
The gauge trades at 11.3 times average estimated earnings, compared with 13.7 for the Standard & Poor’s 500 Index and a multiple of 12.2 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
“We had a sharp decline yesterday and today is just a consolidation,” said Benjamin Tam, a fund manager who helps oversee about $1.5 billion at IG Investment Ltd. in Hong Kong.
China’s State Council yesterday approved an income-distribution plan intended to tackle the nation’s wealth gap. The plan called for boosting minimum wages to a target of at least 40 percent of average salaries, loosening controls on lending and deposit rates and increasing spending on education and affordable housing.
Chow Sang Sang rose 3 percent to HK$22.20. Anta Sports Products Ltd., a Chinese sportswear maker, advanced 2.4 percent to HK$7.17.
Automakers advanced after Shanghai Securities News reported China’s January passenger car sales may have risen 50 percent from a year earlier, citing the China Passenger Car Association. BYD Co., the Chinese carmaker partly owned by Warren Buffett’s Berkshire Hathaway Inc., rose 5.2 percent to HK$27.25. Guangzhou Automobile Group Co., a Chinese partner of Toyota Motor Corp. and Honda Motor Co., climbed 2.2 percent to HK$6.47.
Kingway Brewery surged 7 percent to HK$3.51. China Resources Snow Breweries Ltd., which SABMiller co-owns with government-backed China Resources Enterprise Ltd., will pay HK$6.6 billion ($851 million) for Kingway Brewery assets, according to a statement to the Hong Kong stock exchange yesterday. China Resources Enterprise slid 3 percent to HK$26.10.
Futures on the Standard & Poor’s 500 Index were little changed. The gauge rose 1 percent yesterday as earnings topped forecasts and Dell Inc. agreed to be taken private in the largest leveraged buyout since the financial crisis.
Casino shares tumbled after The Times reported China’s government is planning a crackdown on triad-linked junket operators that bring gamblers from the mainland to Macau. The report cited unidentified people in law enforcement.
Sands China dropped 5.2 percent to HK$36.30, while Wynn Macau Ltd., the Hong Kong-listed casino unit of Wynn Resorts Ltd., slid 6.8 percent to HK$19.44.
Soho China Ltd. fell 8 percent to HK$6.32 after a Beijing Times report linked the developer to a possible crime. A woman who bought properties from the company may have been involved in money-laundering, the report said. Any accusation of collusion or kickbacks is rumor, Soho Chief Executive Officer Zhang Xin said yesterday in a statement.
Digital China Holdings was suspended from trading after slumping 13 percent to HK$10.72. The company is prohibited from taking part in government procurement in the next three years after bidding violations, the Ministry of Finance said in a statement Jan. 22. The shares could react negatively, Nomura Holdings Inc. analysts led by Leping Huang wrote in a note today.
Futures on the Hang Seng Index rose 0.7 percent to 23,246. The HSI Volatility Index slid 2.1 percent to 14.33, indicating traders expect a swing of 4.1 percent for the equity benchmark in the next 30 days.