Hong Kong Stocks Rise Second Day as Developers Lead GainsYoshiaki Nohara
Hong Kong stocks rose, with the city’s benchmark index extending yesterday’s rally, as mainland property companies led the advance.
China Resources Land Ltd. added 2.6 percent on speculation mainland banks will offer cheaper mortgages. AAC Technologies Holdings Inc., a supplier of acoustic components to Apple Inc., advanced 1.6 percent after the U.S. technology company’s profit beat estimates. Gome Electrical Appliances Holding Ltd. jumped 4.6 percent after saying six-month net-income may more than double. China Modern Dairy Holdings Ltd. rose 1.6 percent on expectations first-half revenue will jump.
The Hang Seng Index gained 0.5 percent to 23,888.62 as of 9:56 a.m. in Hong Kong after yesterday capping its biggest jump since May 12. The Hang Seng China Enterprises Index, also known as the H-share index of mainland shares traded in the city, added 1.1 percent to 10,716.24 after surging yesterday by the most since March 24 amid speculation the government will do more to prop up growth.
The Hang Seng Index has reversed losses of as much as 9.1 percent this year on signs China’s economy is stabilizing after policy makers deployed targeted stimulus to counter a slowdown. The Standard & Poor’s 500 Index climbed to within two points of a record close yesterday amid optimism that inflation won’t force the central bank to reduce stimulus more quickly.
The Hong Kong gauge traded at 11.1 times estimated earnings yesterday, compared with 7.4 for the H-share index and 16.6 for the S&P 500.
Chinese banks will probably offer discounted mortgage rates in the second half as demand in the country’s housing market weakens, according to a Bloomberg News survey. The National Development and Reform Commission approved a 17.4 billion yuan ($2.8 billion) investment to build a new power transmission line between Inner Mongolia and Jinan city in Shandong province, China Securities Journal reported.
About 330 companies on the Hang Seng Composite Index are scheduled to report earnings from this week through the end of August, according to data compiled by Bloomberg.
Futures on the S&P 500 were little changed today. The gauge climbed 0.5 percent yesterday in New York as data showed inflation slowed in June from May and investors assessed earnings from Travelers Cos. to Comcast Corp.
Investors have been scrutinizing U.S. inflation data to determine when the central bank will begin raising its benchmark interest rate. Last week, Federal Reserve Chair Janet Yellen told lawmakers the central bank plans to press on with record easing to combat persistent weakness in the job market.
China should allow some companies to default and encourage financial institutions and investors to re-evaluate the risks of local government debt and the property market, a commentary in China Securities Journal said.