Hong Kong Stocks Rise to 11-Week High as Tencent Advances

Hong Kong stocks rose, with the benchmark index climbing to an 11-week high, as Tencent Holdings Ltd. provided the biggest boost to the market after U.S. technology shares rallied.

Tencent, Asia’s biggest Internet company, added 2.7 percent to bring its two-day rebound to 4.4 percent. China Longyuan Power Group Corp. jumped 8.8 percent after the wind-farm operator reported higher power output. China Railway Group Ltd., the country’s No. 2 builder of train lines, rose 1.6 percent on a report the nation boosted its 2014 railway investment target.

The Hang Seng Index climbed 1.1 percent to 22,843.17 at the close in Hong Kong. About nine stocks gained for each that fell on the 50-member gauge, with volume 31 percent higher than the 30-day intraday average. The Hang Seng China Enterprises Index, also known as the H-share index, added 0.6 percent to 10,380.74.

“Hong Kong’s rebounding, and Internet stocks regained power,” said Linus Yip, a strategist at First Shanghai Securities Ltd. “There’s hope more stimulus will come out from China, though we don’t expect any big policies. The government must follow the reform agenda.”

Futures on the Standard & Poor’s 500 Index climbed 0.1 percent after the equity benchmark rose 0.4 percent yesterday. Google Inc. to Facebook Inc. rallied as the tech-heavy Nasdaq 100 Index rebounded from its worst three-day drop since 2011. Alcoa Inc., the largest U.S. aluminum producer, unofficially kicked off earnings season by reporting first-quarter profit after the close that surpassed expectations.

Relative Value

The Hang Seng Index is the second-worst performer among developed markets this year amid signs of an economic slowdown that threatens China’s 7.5 percent growth target. The gauge traded at 10.5 times estimated profit, compared with 15.7 times for the S&P 500 yesterday.

China is able to loosen monetary policy “moderately in some areas for a while,” such as by cutting the reserve requirement ratio, Zhang Monan, a researcher at the China Center for International Economic Exchanges, wrote in an article in the China Securities Journal.

Tencent gained 2.7 percent to HK$523.50, extending its rebound from an 11 percent drop. The Internet company is among the top China picks for the second quarter, Bank Julius Baer & Co. analyst Kelvin Wong said today in Hong Kong.

China Railway Group rose 1.6 percent to HK$3.90 after saying it won projects valued at 50.6 billion yuan ($8.17 billion), and Daiwa Securities Group Inc. raised its equity rating to buy from outperform. China Railway Construction Corp. gained 2.6 percent to HK$7.48.

Rail Spending

The nation raised this year’s fixed-asset investment target for railways to 720 billion yuan from 700 billion yuan set at the beginning of the year, People’s Daily reported, citing Sheng Guangzu, general manager of China Railway Corp.

Bank of East Asia Ltd., Hong Kong’s largest family-run lender, rose 3 percent to HK$33.10 after saying it signed an agreement with Shanghai Shengpay e-payment Service Co. to provide cross-border electronic payment services.

China Longyuan surged 8.8 percent to HK$8.27. The alternative-energy producer’s first-quarter total power output rose 3.3 percent from a year earlier.

Asia’s largest economy may report tomorrow that exports grew 4.8 percent last month from a year earlier after unexpectedly contracting in February, according to the median estimate in a Bloomberg survey.

The Hang Seng China gauge has rebounded 13 percent since entering a bear market on March 20, sending its 14-day relative-strength index to 72.1, above the 70 threshold seen by some traders as a sign to sell.

Stronger U.S. growth this year and next will help the world economy withstand weaker recoveries in emerging markets including Brazil and Russia, the International Monetary Fund said in a report yesterday. The IMF predicted global growth of 3.6 percent this year, compared with a January estimate of 3.7 percent. Next year, the expansion will accelerate to 3.9 percent, unchanged from the prior forecast.

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