Hong Kong Stocks Rises to Seven-Month High on Fed OutlookKana Nishizawa and Adam Haigh
Hong Kong stocks rose, with the benchmark index closing at its highest level in more than seven months, after the Federal Reserve unexpectedly refrained from cutting record stimulus.
Li & Fung Ltd., a supplier of toys and clothes that gets most its revenue from the U.S., rose 2.6 percent. Zhaojin Mining Industry Co., China’s No. 2 gold producer, surged 12 percent as the price of the precious metal jumped the most in 15 months after the central bank’s decision. Sino Land Co., controlled by billionaire Robert Ng, jumped 8.6 percent to lead Hong Kong developers higher.
The Hang Seng Index gained 1.7 percent to 23,502.51, its highest close since Feb. 4. All but six shares on the 50-member gauge climbed, with volume 25 percent higher than the 30-day average ahead of a holiday tomorrow. The Hang Seng China Enterprises Index, also known as the H-share index, rose 1.7 percent to 10,769.54.
“The Fed really surprised the market with no tapering,” said Teresa Chow, a fund manager at RBC Investment (Asia) Ltd., which oversees $1.5 billion “Sentiment is turning positive with delay of the tapering. If you look at recent Chinese economic data, it’s so solid and mostly better than expected.”
Futures on the Standard & Poor’s 500 Index climbed 0.3 percent today. The U.S. equity gauge surged to a record yesterday in New York after Fed Chairman Ben S. Bernanke and his colleagues maintained an $85 billion pace of monthly bond buying. The central bank said it wants to see more improvement in the U.S. economy and warned that an increase in interest rates threatened the recovery. Analysts had expected a $5 billion reduction, according to estimates compiled by Bloomberg.
The Fed said its target interest rate will remain near zero as long as unemployment exceeds 6.5 percent, provided the outlook for inflation is no higher than 2.5 percent. The jobless rate was at 7.3 percent in August.
Stocks linked to the U.S. advanced. Li & Fung gained 2.6 percent to HK$11.96. Man Wah Holdings Ltd., a sofa maker that gets half its sales from the U.S., rose 2.5 percent to HK$12.14.
Gold producers surged after prices for the precious metal jumped overnight in New York by 4.1 percent to, the biggest gain since June 2012. Zhaojin Mining advanced 12 percent to HK$7.40. Zijin Mining Group Co. jumped 10 percent to HK$2.02.
The H-share index entered a bull market last week after rebounding more than 20 percent from a June low, while the Hang Seng Index erased its 2013 loss. Shares climbed as China’s economic data including exports and factory output added to signs that growth in the world’s second-biggest economy is stabilizing. Hong Kong’s equity benchmark traded at 11.27 times estimated earnings, compared with 15.6 for the Standard & Poor’s 500 Index.
A preliminary gauge of China’s manufacturing due Sept. 23 from HSBC Holdings Plc and Markit Economics on Sept. 23 is expected to climb to 50.8 in September from 50.1 the previous month, according to the median estimate of 13 analysts surveyed by Bloomberg. A reading above 50 signals expansion.
Developers rebounded after the Fed refrained from tapering, easing concern that rising interest rates and bond yields would hurt the sensitive property sector, according to RBC Investment’s Chow. Sino Land gained 8.6 percent to HK$11.86. Sun Hung Kai Properties Ltd. climbed 5 percent to HK$108.70.
Skyworth Digital Holdings Ltd. sank 4.4 percent to HK$3.94. Citigroup Inc. cut its recommendation on the TV manufacturer, advising investors to sell the shares and reducing its price estimate by 46 percent to HK$3.57.
Futures on the Hang Seng Index rose 1.6 percent to 23,561. The HSI Volatility Index sank 6.8 percent to 16.23, indicating traders expect the benchmark equity index to swing 4.7 percent in the next 30 days.