Hong Kong Stocks Extend Advance on PMI; China Gas Jumps

Hong Kong stocks extended gains, with the equity benchmark heading for a five-week high, after preliminary China manufacturing data beat estimates. China Gas Holdings Ltd. surged after the government signed a $400 billion supply accord with Russia.

The Hang Seng Index climbed 0.7 percent to 22,988.67, poised for the highest close since April 14, as of 9:48 a.m. in Hong Kong. The Hang Seng China Enterprises Index, also known as the H-share index, added 0.9 percent to 10,084.01.

The H-share measure fell 7.6 percent this year through yesterday as China data from credit growth to property prices fueled concern about a deepening slowdown in the world’s second-largest economy. The gauge traded at 6.9 times estimated earnings at the last close, compared with 10.6 times for the Hang Seng Index and 16 for the Standard & Poor’s 500 Index.

A flash Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics rose to 49.7 in May compared with analysts’ estimates of 48.3 and a final figure of 48.1 a month earlier. Although better than expected, the reading below 50 signals a fifth month of contraction in factory activity.

China shouldn’t make fundamental changes to its monetary policy given the current economic situation and can still use fiscal policy to support economic growth, according to a front-page commentary in Securities Times.

Russia signed a $400 billion deal to supply natural gas to China negotiations that lasted a decade, mostly because of a disagreement over the price. The accord between the world’s largest energy exporter and the biggest consumer will allow state-run gas producer Gazprom to invest $55 billion developing fields in eastern Siberia and building a new pipeline, Russian President Vladimir Putin said.

Futures on the S&P 500 rose 0.1 percent. The underlying gauge rose 0.8 percent yesterday after Federal Reserve policy makers said continued stimulus doesn’t risk sparking a jump in the inflation rate.

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