Hong Kong Shares Rise for Second Day as Tencent Climbs

Hong Kong shares rose for a second day, with the city’s benchmark index advancing to a one-month high as Tencent Holdings Ltd. surged to a record.

Tencent, Asia’s biggest Internet company, climbed 5.2 percent, contributing the most to the Hang Seng Index’s advance. China Petroleum & Chemical Corp., also known as Sinopec, jumped 5.3 percent after comments from Chairman Fu Chengyu indicated Asia’s biggest refiner will step up the pace of reforms. Zijin Mining Group Co., China’s top gold producer, slid 2.3 percent after prices of the precious metal fell.

The Hang Seng Index advanced 1.7 percent to 22,828.18, the highest close since Jan. 22. All but one stock on the 50-member gauge rose. The Hang Seng China Enterprises Index of mainland stocks, also known as the H-share index, added 1.5 percent to 9,957.77 after falling as much as 0.5 percent. The measure yesterday snapped a six-day rout as the yuan stabilized.

“Investors are finding a bit of value in the market following the selloff,” Stuart Beavis, head of institutional equity derivatives at Vantage Capital Markets in Hong Kong, said by phone. “I don’t think the market is a screaming buy right now. There’s still a lot of risks in China.”

China’s currency has gone from being the most attractive carry-trade bet in emerging markets to the worst in the space of two months, as central bank efforts to weaken the currency cause volatility to surge. President Xi Jinping is seeking to liberalize interest rates, allow more room for the exchange rate to fluctuate and set up yuan-trading hubs around the world.

China Volatility

“We’re still cautious about China,” Jack Lin, Singapore-based head of Asia and Middle East at Pioneer Investment Management Ltd., which manages about $238 billion, said in an interview yesterday. “China has some challenges as the government embarks on structural reforms.”

Hong Kong’s benchmark index has dropped 2.1 percent this year, the third-worst performer among 24 developed markets tracked by Bloomberg. The gauge is valued at 10.2 times estimated 12-month earnings and the H-share index at 6.7 times, compared with 15.7 for the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.

Futures on the S&P 500 Index rose 0.2 percent. The U.S. benchmark index yesterday closed little changed, erasing earlier gains. The gauge has climbed above its closing record of 1,848.38 every trading day this week, only to retreat from that level by the end of the day.

An unexpected rise in new U.S. home sales yesterday boosted speculation Federal Reserve Chair Janet Yellen will reiterate plans to continue stimulus cuts in a Senate testimony today. Yellen said this month that the economy can weather cuts to the country’s bond-buying program, adding that only a notable change to the economic outlook would prompt the central bank to slow the pace of tapering.

Facebook Effect

Tencent jumped 5.2 percent to HK$616.50. Facebook Inc.’s $19 billion purchase of mobile-messaging service WhatsApp Inc. is positive as it may lead to a higher valuation for Tencent’s WeChat, said Mari Oshidari, a Hong Kong-based strategist at Okasan Securities Group Inc. Shares extended gains after breaching the so-called technical resistance level of HK$600, she said.

“People are still looking for growth and feel more comfortable about the technology sector because they’d still deliver good results in the short term,” Alex Wong, a Hong Kong-based director of asset management at Ample Capital Ltd., said by phone today.

FIH Mobile Ltd., a mobile-phone assembler, surged 13 percent, the most since May 2013. UBS AG raised its rating on the stock to buy from sell, saying the company is gaining orders from Chinese smartphone maker Xiaomi Corp.

Sinopec surged 5.3 percent to HK$6.99. The company may announce further restructuring during next month’s government meetings in Beijing, Chairman Fu Chengyu said on Feb. 25, according to a report yesterday by China Business News.

Gold producers declined as prices of the metal fell for a second day. Zijin Mining lost 2.3 percent. Zhaojin Mining Industry Co., China’s second-biggest gold producer, sank 4.8 percent to HK$5.12.

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