Hong Kong Stocks Eke Out Gain as Casinos Gain, Developers Drop

  • Sands China, Galaxy Entertainment extend index’s best advance
  • Wharf, MTR, HKEX decline after reporting lower earnings

Hong Kong stocks edged higher, led by Macau casino operators, as a bull-market rally showed signs of exhaustion.

The Hang Seng Index rose 0.1 percent at the close, paring an advance of 0.7 percent. Sands China Ltd. and Galaxy Entertainment Group Ltd. gained the most in two weeks. Wharf Holdings Ltd., Hong Kong’s largest mall operator, dropped 1.9 percent after posting a decline in net income. MTR Corp. capped its biggest loss in almost three months after reporting lower underlying profit. The Shanghai Composite Index lost 0.2 percent.

The Hang Seng Index has rallied more than 22 percent from its February low to enter a bull market as concerns about a Chinese slowdown waned, the city’s property market showed signs of stabilization and investors speculated global central banks will keep adding to stimulus. While Hong Kong’s benchmark index is valued at 1.2 times net assets, up from a low of less than 1 earlier in the year, that’s still 20 percent below its seven-year average.

“The run-up for Hong Kong stocks is quite decent so the market probably needs to take a breather,” said Dai Ming, a fund manager at Hengsheng Asset Management Co. “The market is still promising because of its cheap valuation.”

Casino Rally

Hong Kong’s benchmark gauge closed at 22,492.43. The Hang Seng China Enterprises Index added 0.2 percent.

Sands China rose 5.2 percent, climbing for a fifth day, while Galaxy Entertainment advanced 3.4 percent. Casino shares have led gains on the Hang Seng Index in the past month as commentators including Las Vegas Sands Corp.’s Sheldon Adelson said the industry was bottoming out.

Wharf dropped for the first time in five days after saying first-half profit fell 3.3 percent as weak retail sales kept it from charging tenants higher rents. Railway operator MTR slumped 3.7 percent after reporting a 26 percent decline in underlying profit for the first half. 

Hong Kong Exchanges & Clearing Ltd., Asia’s biggest exchange operator by market capitalization, slid 1 percent after reporting first-half earnings declined 27 percent on lower securities and commodities trading. The shares reached a three-month high earlier this week.

Shanghai’s benchmark index retreated to 3,018.75, while the CSI 300 Index lost 0.4 percent. China’s statistics bureau is set to release July industrial output, retail sales and fixed-asset investment figures on Friday, and money supply data may be published as early as Wednesday. Data this week showed exports remained subdued while a decline in producer prices narrowed.

There’s no need for the country to rush to cut borrowing costs and reserve-requirement ratios, China National Radio reported, citing Yao Jingyuan, a researcher at a State Council office. The key issue with the economy is not monetary policy because the supply of money is growing normally, he said.

— With assistance by Shidong Zhang

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