Hong Kong Stocks Advance as Casinos, Port Operators Climb

Hong Kong stocks rose, with the city’s benchmark index rising for the first time in three days, as casinos and port operators advanced, countering losses among coal producers.

SJM Holdings Ltd., Asia’s biggest casino operator, climbed 2.9 percent after Deutsche Bank AG projected record Macau gambling revenue next month as China heads for a seven-day holiday. China Merchants Holdings International Co. rose 4.4 percent after Goldman Sachs Group Inc. recommended the port operator’s shares. China Coal Energy Co., the nation’s top producer of the fuel, slipped 3.3 percent to extend losses after Moody’s Investors Service projected weaker coal prices.

The Hang Seng Index added 0.1 percent to 23,209.63 at the close, after rising as much as 0.4 percent and falling 0.1 percent. The Hang Seng China Enterprises Index, also known as the H-share index was little change at 10,598.18.

“There’s a little bit more confidence in the market,” Andrew Sullivan, director of sales trading at Kim Eng Securities in Hong Kong, said in a telephone interview. “On a global basis, Hong Kong really stands out as an underperforming market. People have been worried about the slowdown in China and the information we’re getting recently seems to indicate that things are not as bad.”

Relative Value

The Hang Seng Index climbed 6.8 percent this month, poised for its biggest advance since September 2012, after a gauge of China manufacturing rose to a six-month high and after the Federal Reserve unexpectedly refrained from cutting stimulus. The equity benchmark traded at 11.1 times estimated earnings yesterday, compared with 15.4 for the Standard & Poor’s 500 Index. The H-share index entered a bull market this month after rebounding more than 20 percent from a June low.

Reports gave conflicting views of China’s recovery. The China Beige Book survey showed the economy slowed this quarter, and investor Jim Chanos told a conference in New York he isn’t convinced by the nation’s improving fundamentals. State economist Fan Jianping sees 7.7 percent gross-domestic product expansion this year, exceeding the state’s 7.5 percent target, according to a China Securities Journal report.

Macau Gaming

Casinos climbed on expectations Macau will post record gaming receipts next month. Revenue may rise 17 percent to 32 billion patacas ($4 billion) from a year earlier, Deutsche Bank analyst Karen Tang wrote in a note. Rooms in 14 of 17 hotels surveyed by the brokerage are fully booked Oct. 3-5.

SJM Holdings rose 2.9 percent to HK$21.30. Sands China Ltd., the Macau gambling resort operator controlled by billionaire Sheldon Adelson, increased 1.8 percent to HK$48.60.

Port stocks rallied after the state-run Xinhua News Agency said Shanghai’s free-trade zone will open Sept. 29. A draft plan seen by Bloomberg News shows the area may liberalize 19 industries from banking to shipping. Goldman Sachs upgraded

China Merchants Holdings surged 4.4 percent to HK$28.80 after being raised to buy from neutral at Goldman Sachs. Cosco Pacific Ltd., a port operator that gets about 66 percent revenue from China, gained 1.7 percent to HK$12.32.

Public Offerings

International Housewares Retail Co., which has outlets in Hong Kong, China, Singapore and Malaysia, gained 6.1 percent to HK$2.98 on its trading debut. CT Environmental Group Ltd., a wastewater treatment company, dropped 10 percent to HK$1.33 on its first trading day.

Hong Kong Exchanges & Clearing Ltd., the world’s second-biggest bourse by market value, slipped 1.2 percent to HK$126.40. Talks with Alibaba Group Holding Ltd., China’s largest e-commerce company, for an initial public offering broke down after it sought partnership control of board nominations, and the company is moving toward a U.S. listing, according to a person familiar with the matter.

Futures on the S&P 500 lost 0.3 percent. The gauge yesterday fell a fourth day from a record high on concern lawmakers won’t reach a budget deal to avoid a government shutdown. The Conference Board’s index of U.S. consumer confidence slumped in September to a four-month low.

Fed Tapering

The Fed said after its meeting last week that it wants more signs of strength in the labor market before paring its $85 billion of monthly asset purchases. The central bank is expected to wait until December before taking the first steps in slowing stimulus, according to 24 of 41 economists surveyed Sept. 18-19 by Bloomberg News.

Coal producers posted the biggest declines on the Hang Seng Index. China Coal sank 3.3 percent to HK$4.75. China Shenhua Energy Co., the nation’s second-largest producer of the fuel, slid 1.8 percent to HK$24.30. Yanzhou Coal Mining Co. dropped 2.2 percent to HK$7.73.

The fuel’s price will weaken into 2014 due to prevailing excess supplies, pressuring the credit quality of producers, Moody’s Investors Service said yesterday. Benchmark coal prices at Qinhuangdao, China’s biggest coal port, dropped 11 percent this year.

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