Hong Kong H-Shares Rise Most Since August on U.S., China

Hong Kong stocks climbed, with a gauge of Chinese companies rising the most in three months, amid speculation China will soon release details of economic reform and on optimism for continued Federal Reserve stimulus.

Li & Fung Ltd., a supplier of toys and clothes that gets most its revenue from the U.S., rose 4.2 percent. Chinese brokerage Citic Securities Co. jumped 6.4 percent on speculation policy makers will announce measures that benefit capital markets. Luk Fook Holdings International Ltd. soared 8.9 percent after the jeweller said it expects significant profit gains.

The Hang Seng China Enterprises Index, also known as the H-share index, climbed 3 percent to 10,702.70 at the close, its biggest increase since Aug. 12. The Hang Seng Index gained 1.7 percent to 23,032.15, capping a 1.3 percent weekly gain. All but two shares rose on the 50-member gauge on volume 52 percent higher than the 30-day average.

“We are expecting more details of China’s policy reform to come out,” said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. “Reform in mainland China is good for the long run but for the short term we still have to see. The Fed’s possible delay of tapering is helping the market.”

Janet Yellen, the nominee for chairman of the Fed, signaled during her Senate confirmation hearing yesterday that she’ll maintain record monetary stimulus until the economy is stronger.

China’s Communist Party’s Central Committee passed a 20,000-word “decision about major issues related to reform” that addresses 15 areas and 60 “concrete tasks,” said Yang Weimin, a deputy head at the Office of the Central Leading Group on Financial & Economic Affairs, according to a People’s Daily report today.

Reform Details

Investors’ expectations that the Chinese government would release details of discussions soon after the end of the plenum were “misplaced” as reforms will be announced over the next seven to 10 days, Jonathan Garner, Hong Kong-based chief Asia and emerging-market strategist at Morgan Stanley, said in an interview from Singapore yesterday.

Citic Securities jumped 6.4 percent to HK$16.58, while China Everbright Ltd. gained 3.9 percent to HK$11.16. China Securities Journal reported the nation’s capital markets have good opportunities to grow, citing Xiao Gang, chairman of the China Securities Regulatory Commission.

New China Life Insurance Co., the nation’s third-largest life insurer by premium income last year, surged 8.3 percent to HK$24.70.

Dairy Shares

Yashili International Holdings Ltd. climbed 3 percent to HK$4.74 after the baby-food maker was rated a new buy at Citigroup Inc. China Mengniu Dairy Co., the nation’s largest dairy company, gained 2.8 percent to HK$33.50. China Modern Dairy Holdings Ltd. jumped 2.6 percent to HK$4.

China’s government may announce “a significant change” to the outdated one-child policy in the plenum decision, Lu Ting, a Hong Kong-based economist at Bank of America Corp., wrote in an e-mailed note today. Such a move would benefit makers of infant formula.

China Shenhua Energy Co., the mainland’s top coal miner by market value, rose 3.2 percent to HK$24.50, while Yanzhou Coal Mining Co. gained 2.9 percent to HK$7.76. China’s power consumption rose 9.5 percent in October from a year earlier, according to a statement on National Energy Administration’s website.

Stimulus Outlook

Futures on the Standard & Poor’s 500 Index gained 0.1 percent today. The equity gauge climbed 0.5 percent yesterday, extending its record high. Yellen, nominated to succeed Fed Chairman Ben S. Bernanke, testified to the Senate that removing monetary stimulus too soon would threaten a fragile economic recovery. Jobless claims for the week ended Nov. 9 fell less than estimated, adding to the case for delaying reduction of asset purchases.

Companies that rely on the U.S. for sales advanced. Li & Fung rose 4.2 percent to HK$10.90. Man Wah Holdings Ltd., a sofa maker that gets half its sales from the U.S., rose 0.6 percent to HK$13.28.

The Hang Seng Index advanced 16 percent from this year’s low on June 24 amid signs China’s economy is stabilizing. Hong Kong’s benchmark index traded at 11 times estimated earnings today, compared with 16.2 for the S&P 500 yesterday.

Luk Fook jumped 8.9 percent to HK$29.95. The luxury retailer said it expects first-half profit to climb on gold-product sales and “promising growth” of gem-set jewelry.

Among stocks that fell, Sun Art Retail Group Ltd. slumped 6.6 percent to HK$11.68. The mainland hypermarket operator’s rating was cut to hold from buy at Bank of China International Ltd., which cited weakened sales momentum.

Futures on the Hang Seng Index rose 2 percent to 23,003. The Hang Seng Volatility Index advanced 1.5 percent to 15.88, indicating traders expect the benchmark equity index to swing 4.6 percent in the next 30 days.

Before it's here, it's on the Bloomberg Terminal.