Hong Kong Stocks Rise as China PMI Fuel Stimulus Bets

Hong Kong’s benchmark index rose as weaker-than-expected China manufacturing fueled stimulus bets. Gaming stocks led declines after Macau’s casino revenue dropped.

The Hang Seng Index climbed less than 0.1 percent to 24,752.09 in Hong Kong after falling as much as 0.2 percent. The Hang Seng China Enterprises Index, also known as the H-share gauge, lost less than 0.1 percent to 10,958.81.

An official index of China’s factory activity declined to 51.1 in August, compared with the median estimate of 51.2 in a Bloomberg survey and 51.7 the previous month. A private survey of the industry from HSBC Holdings Plc and Markit Economics fell to 50.2 after a preliminary figure of 50.3 for the period. Readings above 50 indicate growth.

“People expect there will be some stimulus measures launched by the Chinese government as the economy is not as strong as expected,” said Delta Asia Securities Ltd. strategist Sam Chi Yung. “Since it’s a holiday in the U.S., this may reduce turnover in Hong Kong, making the market more volatile.”

Want Want China Holdings Ltd., a maker of snacks and beverages, climbed 2.1 percent to HK$9.81 after last week falling to its lowest since September 2012. Dongfeng Motor Group Co. advanced 1.4 percent to HK$14.56 after the mainland automaker reported higher first-half profit. Sands China Ltd. fell the most on the Hang Seng Index.

Hong Kong’s benchmark index last week posted its first monthly drop since April after a 6.8 percent rally in July. Investors are weighing whether mainland policy makers will add stimulus amid slumping credit growth and housing prices. The gauge traded at 11.4 times estimated earnings today, compared with 7.6 for the H-share gauge and 16.8 on the Standard & Poor’s 500 Index at the last close.

Stimulus Bets

China may step up action in coming weeks to meet its growth goal as today’s manufacturing numbers confirmed a weak economy recovery, Lu Ting, Bank of America Merrill Lynch’s Hong Kong-based head of Greater China economics, wrote in a report today.

Brokerages in Hong Kong and Shanghai said the first full trial of the cities’ stock-exchange link went smoothly over the weekend, supporting plans to go live in October. The program offers foreigners unprecedented access to mainland equities.

Lenovo Group Ltd., the world’s largest maker of personal computers, jumped 3.6 percent to HK$12.26 to lead gains on the Hang Seng Index. Lenovo extended its advance after Credit Suisse Group AG named it as one of the stocks that will benefit from cross-border trading.

Gaming Shares

Macau casino revenue fell 6.1 percent from a year earlier to 28.9 billion patacas ($3.62 billion) in August, according to data published on the website of the city’s Gaming Inspection and Coordination Bureau. Analysts had expected a 2 percent drop, according to the median estimate in a Bloomberg survey.

Sands China slid 3.2 percent to HK$48.90, falling for a ninth day in its longest losing streak since listing in 2009. Galaxy Entertainment Group Ltd., a gaming company controlled by billionaire Lui Che-woo, retreated 2.9 percent to HK$56.70.

Real estate developer KWG Property Holding Ltd. slid 4.8 percent to HK$5.36, extending last week’s 6.9 percent drop.

Hong Kong’s stock exchange is seeking views on loosening shareholder voting rules, issuing a “concept paper” last week. The city’s regulators rejected the governance structure of Alibaba Group Holding Ltd. this year, prompting the Chinese e-commerce company to turn to the U.S. for its stock debut.

Election Protests

Hong Kong’s leadership candidate in 2017 must get the support of a 1,200-member nominating committee, according to a National People’s Congress statement after the framework was approved yesterday. Protest leaders in Hong Kong vowed to start an era of civil disobedience that may disrupt one of the world’s financial capitals after they accused China of betraying its promise to deliver free elections.

U.S. markets today are shut for Labor Day. The S&P 500 rose 0.3 percent to a fresh record Aug. 29 amid optimism in the strength of the economy. Reports showed U.S. consumer confidence unexpectedly rose in August, showing a brightening in Americans’ moods as the labor market gains traction.

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