China’s Stocks Rise Most in Two Weeks as Consumer Shares Climb

  • Advance comes after volatility gauge drops to two-year low
  • Hang Seng Index rises most in 2016 as casinos lead gains

Mainland Chinese stocks climbed the most in two weeks, led by consumer companies, amid optimism the economy was stabilizing. A rally by casino shares led Hong Kong equities to their highest level this year.

The Shanghai Composite Index climbed 1.1 percent at the close, the first time it’s moved more than 1 percent in either direction in two weeks. Dairy-product maker Inner Mongolia Yili Industry Group Co. jumped the most in nearly two months, while SAIC Motor Corp. led gains for a measure of consumer-discretionary companies. Sands China Ltd. advanced the most since March in Hong Kong after the company said its mass-market gaming revenue in Macau rose for the first time in two years.

Tuesday’s gains for mainland equities follow a spell of relative quiet that sent the Shanghai gauge’s 10-day volatility to a two-year low on Monday. China’s second-quarter economic growth and monthly retail sales and industrial output exceeded estimates, according to official data released this month. The nation’s 10-year sovereign bond yields are currently trading near six-month lows.

“We are seeing fund flow from debt into equities as bond yields remain low and systemic risks have been contained,” said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. “Further gains will depend on macro data.”

The Shanghai Composite advanced to 3,050.17 at Tuesday’s close, while the Hang Seng China Enterprise Index of mainland companies in Hong Kong climbed 0.3 percent. The Hang Seng Index added 0.6 percent to close at its highest level since Dec. 24.

Inner Mongolia Yili Industrial Group Co. jumped 4.3 percent, while SAIC Motor Corp. surged 6.7 percent. Shandong Gold Mining Co. rallied 7.2 percent as bullion prices rose after a two-day decline, and Yanzhou Coal Mining Co. paced energy companies higher with a 2.1 percent gain.

Casinos Rally

Sands China jumped 6 percent, after the company’s chairman and billionaire casino mogul Sheldon Adelson said he’s optimistic that recreational gamblers and tourists are helping a recovery in Macau. Galaxy Entertainment Group Ltd. added 6.5 percent in Hong Kong, while Wynn Macau Ltd. surged 7.3 percent.

“With optimism that the second half will get better for casinos on a year-on-year basis, investors who were underweight casino stocks in the last few months are getting back in,” said Michael Ting, a Hong Kong-based analyst at CIMB Group Holdings Ltd. “Sands management said in a conference call that mass gaming returned to growth in June and, overall, the market may have had a bottom.”

Sino Land Co. rallied 2.7 percent as developers advanced, propelling the Hang Seng Property Index to its highest close since August 2015. The Standard newspaper reported the city’s banks have lowered the minimum amount of mortgage loans to HK$3 million ($386,770).

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