Hong Kong Stocks Advance on Outlook for U.S. and Global Growth

Hong Kong stocks rose, with the city’s benchmark index climbing the most in a week, after U.S. retail sales beat estimates and the World Bank raised its global economic growth forecast.

Man Wah Holdings Ltd., a sofa maker that gets half its sales from the U.S., gained 2.1 percent. Cement makers jumped after Anhui Conch Cement Co., China’s biggest maker of the building material, said it expects 2013 profit to surge about 50 percent. Lenovo Group Ltd. increased 5.5 percent after China International Capital Corp. increased its target price on shares of the biggest maker of personal computers.

The Hang Seng Index advanced 0.5 percent to 22,902 at the close in Hong Kong. About three stocks climbed for every two that fell on the 50-member gauge, with volume 21 percent lower than the 30-day intraday average. The Hang Seng China Enterprises Index of mainland companies listed in the city climbed 0.5 percent to 10,201.79. Data today showed China’s new local-currency loans in December trailed analyst estimates and money-supply growth slowed.

“The U.S. retail sales were good, which means it’s doing the right thing by tapering,” said Linus Yip, a strategist at First Shanghai Securities Ltd. “It’s helping investor sentiment in Hong Kong a little bit, but investors are still cautious whether economic growth in China will be slowing down. The new bank loans data wasn’t that good as it was lower than market expectations.”

Futures on the Standard & Poor’s 500 Index were little changed today after the U.S. equity gauge climbed 1.1 percent yesterday. Retail sales increased 0.2 percent last month, beating the 0.1 percent median forecast of 86 economists surveyed by Bloomberg, data yesterday showed. Excluding cars, demand jumped by the most in almost a year.

World Bank

The Washington-based World Bank sees the global economy expanding 3.2 percent this year, compared with a June projection of 3 percent and up from 2.4 percent in 2013. The forecast for the richest nations was raised to 2.2 percent from 2 percent. Part of the increase reflects improvement in the 18-country euro area, with the U.S. ahead of developed peers, growing twice as fast as Japan.

Man Wah climbed 2.1 percent to HK$13.70, while Li & Fung Ltd., a supplier of toys and clothes that gets most its revenue in the U.S., gained 0.7 percent to HK$10.86.

In China, data showed new yuan loans were 482.5 billion yuan ($79.8 billion), compared with the 570 billion yuan median estimate in a Bloomberg News survey of economists and 624.6 billion yuan in November. Aggregate financing, the government’s broadest measure of credit, was 1.23 trillion yuan, compared with the median projection for 1.14 trillion yuan and 1.23 trillion yuan in November.

Sustainable Growth

At least seven Chinese provinces are setting lower economic growth targets for this year than in 2013, adding to signs that expansion will slow as the government focuses on policies to sustain the economy in the long term.

Hebei, which borders Beijing in the north, set an 8 percent growth goal amid “unprecedented pressure” from air-pollution controls, according to an annual work report published yesterday in the official Hebei Daily. Last year’s target was 9 percent. Fujian in the southeast and Gansu and Ningxia in the northwest are also targeting slower expansion, state-run websites show.

The Hang Seng Index dropped 1.7 percent this year as China’s economic data fueled concern growth is slowing. The measure traded at 10.1 times estimated earnings today, compared with 15.6 for the S&P 500 yesterday. The H-share index slumped 5.7 percent this year and traded at 6.8 times estimated earnings, near levels reached during China’s cash crunch in June.

Anhui Conch climbed 5.9 percent to HK$28.90 after saying it expects a surge in profit last year on increasing sales, rising product prices and lower costs. China Resources Cement Holdings Ltd. jumped 6.1 percent to HK$5.43 after saying it sees full-year profit rising “substantially.” China National Building Material Co. surged 7.5 percent to HK$8.15.

Lenovo rose 5.5 percent to HK$9.96, the steepest gain on the Hang Seng Index. CICC raised its 12-month target price to HK$11.50 from HK$9.30 while maintaining its buy rating on the stock. CICC said in a report it expects sales growth of 10 percent to 15 percent in the third quarter through December.

Hong Kong’s Chief Executive Leung Chun-ying said in his annual address today the city plans to spend about HK$3 billion a year on welfare subsidies for low-income working families. The city also plans to focus on tourism and will build hotels on the island of Lantau to expand its capacity, Leung said.

Fosun International Ltd., a diversified company with interests in steel, property and retail, surged 5.6 percent to HK$8.15. The firm said yesterday after equity markets closed it expects full-year profit to rise “remarkably” from a year earlier.

Miko International Holdings Ltd., a children’s apparel maker, soared 23 percent to HK$2.81 on its debut.

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