Hong Kong Stocks Advance on Technology Shares, U.S. DataKana Nishizawa
Hong Kong stocks rose for a second day as technology shares advanced and after the U.S. reported stronger-than-expected factory output. Citic Pacific Ltd. led declines after agreeing to buy its parent’s financial assets.
Man Wah Holdings Ltd., a sofa maker that gets half its sales from the U.S., surged 7 percent after saying it expects higher profit. AAC Technologies Holdings Inc., which supplies speakers to Apple Inc., gained 2.8 percent. Citic Pacific dropped 3.1 percent to lead declines on the equity benchmark.
The Hang Seng Index climbed 0.3 percent to 22,760.24 at the close in Hong Kong, paring its weekly loss to 1.1 percent. Trading volume today was 40 percent lower than the 30-day average for the time of day. The Hang Seng China Enterprises Index, also known as the H-share index, added 0.4 percent at 10,080.23. Markets in the city will shut from tomorrow and reopen April 22.
“Since we’re going to have holidays, market sentiment is cautious,” said Steven Leung, director of institutional sales at UOB-Kay Hian Holdings Ltd. in Hong Kong. “The recent correction in tech shares in Hong Kong was a bit overdone. There may be some chance for bottom fishing.”
The Hang Seng Index rose 2.8 percent this quarter, the top performer for the period among developed markets from second-worst the previous three months. The H-share gauge rebounded 9.5 percent since entering a bear market on March 20 through amid speculation that China will add stimulus to stabilize the economy.
Data yesterday showed China’s first-quarter gross domestic product growth slowed to the weakest pace in six quarters, while industrial production and fixed-asset investment trailed projections. The Hang Seng Index traded at 10.5 times estimated earnings today, compared with 15.9 for the Standard & Poor’s 500 Index yesterday.
Futures on the U.S. equity benchmark fell 0.2 percent today after the underlying gauge rose 1 percent yesterday as Yahoo Inc. earnings topped estimates. Industrial production rose 0.7 percent in March, more than the 0.5 percent forecast by economists, after a February gain that was twice as big as previously estimated.
Federal Reserve Chair Janet Yellen, in her first major speech on her policy framework, yesterday said U.S. central bankers must be mindful of how short the Fed is of its goals of full employment and price stability.
Man Wah jumped 7 percent to HK$13.18, its steepest advance since Jan. 13. The furniture maker said it expects a “significant” increase in net income for the 12 months ended March 31 from a year earlier.
China will lower reserve ratios at “qualified” rural banks in order to provide more funds to agriculture-related industries, according to a statement on the government website yesterday, citing a State Council meeting chaired by Premier Li Keqiang. He also said the government isn’t considering “strong” stimulus, and reiterated that a bit higher or lower than the official 7.5 percent economic growth target is within a reasonable range.
A measure of information technology shares led gains on the Hang Seng Composite Index after tumbling 9.5 percent last month. Tencent Holdings Ltd., Asia’s largest Internet company, advanced 0.8 percent to HK$525.50 to give the biggest boost to the Hang Seng Index. AAC Technologies climbed 2.8 percent to HK$41.90.
Citic Pacific dropped 3.1 percent to HK$13.86. The steelmaker and property developer agreed to pay 226.9 billion yuan ($36 billion) to buy Chinese banking and brokerage assets from its state-owned parent. The company said it will pay 49.9 billion yuan in cash and issue almost 16.6 billion shares at HK$13.48 each.