Hong Kong Stocks Jump by Most in Two Months on EarningsJonathan Burgos and Adam Haigh
Hong Kong stocks rose, with the city’s benchmark index climbing by most in almost two months, amid earnings optimism and as investors await the outcome of the Federal Reserve’s policy meeting concluding today.
China Petroleum & Chemical Corp., Asia’s largest refiner, climbed 2.8 percent after posting a 20 percent jump in third-quarter net income, beating estimates. Chow Tai Fook Jewellery Group Ltd., the world’s largest listed jewelry chain, added 2.9 percent after saying first-half profit probably rose on strong sales. Esprit Holdings Ltd., a clothier that gets about 79 percent of sales from Europe, jumped 5.5 percent after hiring a former Zara executive to manage product design.
The Hang Seng Index rose 2 percent to 23,304.02, the biggest gain since Sept. 2. All but one stock on the 50-member gauge advanced. The Hang Seng China Enterprises Index of mainland companies traded in the city advanced 2.4 percent to 10,640.89, the most since Aug. 13. The Fed will maintain its $85 billion in monthly bond-buying at the end of today’s meeting and may delay its first tapering until March, according to economists surveyed by Bloomberg.
“Company earnings aren’t too bad and that’s helped to boost sentiment,” Ben Kwong, chief operating officer at brokerage KGI Asia Ltd. in Hong Kong, said by phone. “The Federal Reserve is likely to delay tapering until next year, further boosting this liquidity-driven rally.”
The Hang Seng Index climbed 1.9 percent this month. Hong Kong’s benchmark equity gauge traded at 11.1 times estimated earnings today, compared with 16 for the Standard & Poor’s 500 Index yesterday.
Futures on the S&P 500 added 0.2 percent today. The gauge yesterday added 0.6 percent, climbing to a record as earnings from Pfizer Inc. to Xylem Inc. beat estimates and data indicating slower growth fueled bets the Fed will maintain stimulus.
“Company earnings will grow,” said Wellian Wiranto, a Singapore-based investment strategist at the wealth-management unit of Barclays Plc, which oversees about $217 billion worldwide. “Asian companies will benefit from the region’s robust medium-term economic growth. The Fed is likely to wait until at least March next year before embarking on that journey, leaving more breathing space for global markets.”
Sinopec gained 2.8 percent to HK$6.23. Net income rose 20 percent from a year earlier to 22 billion yuan ($3.6 billion) as higher retail fuel prices helped margins. The median of eight analyst estimates compiled by Bloomberg was 19.3 billion yuan.
Of the 31 companies on the Hang Seng Composite Index that reported quarterly earnings since Oct. 1 and for which estimates are available, 48 percent exceeded analyst estimates, according to data compiled by Bloomberg.
Chow Tai Fook gained 2.9 percent to HK$12.60. The company said yesterday it expects to report higher first-half profit by the end of November, driven by strong sales of gold products and a reduction in hedging losses.
Esprit jumped 5.5 percent to HK$13.80, the highest close since May 2012, after the clothing retailer appointed Rafael Pastor Espuch, who worked for 18 years at Inditex SA’s Zara, as chief product officer. The company predicted a return to profitability in the fiscal year ending June as it seeks to rebuild its brand.
Datang International Power Generation Co. climbed 2.6 percent to HK$3.56 after the electricity producer reported third-quarter net income of 1.79 billion yuan, beating the average estimate of four analysts of 1.3 billion yuan.
China Construction Bank Corp. advanced 2.4 percent to HK$6.03. The nation’s second-largest lender is close to reaching a deal to acquire Brazil’s Banco Industrial & Comercial SA, according to a person with direct knowledge of the matter.
China Modern Dairy Holdings Ltd. dropped 5.3 percent to HK$3.41, its biggest decline since June 27. Investors are offering 250 million shares for HK$3.38 to HK$3.45 each, according to terms for the deal obtained by Bloomberg News.