Hong Kong Stocks Extend World-Beating Rally, Fueled by Earnings

  • CK Hutchison, China Mobile advance after half-yearly results
  • Shanghai stocks rally in afternoon trading as developers surge

Hong Kong shares extended a world-beating rally as CK Hutchison Holdings Ltd. advanced after earnings beat estimates and investors shrugged off weaker-than-estimated Chinese economic data.

The Hang Seng Index rose 0.8 percent to its highest close since November. CK Hutchison climbed its highest level since April, while China Mobile Ltd. increased for a second day after its half-yearly earnings exceeded forecasts. Sands China Ltd. capped its best week since March. The Shanghai Composite jumped 1.6 percent, the most in a month, as stake purchases by China Evergrande Group fueled optimism that the pace of merger activity in the property sector will accelerate.

The Hang Seng Index has surged 14 percent in the past three months, the biggest advance among major global benchmark gauges, amid an improving interest-rate outlook and signs of stability in the city’s property market. China’s recent economic stabilization faltered in July as factory output, retail sales and investment all slowed.

“The rally in Hong Kong has fundamental support as earnings from its flagship companies are pretty strong,” said Wang Zheng, the Shanghai-based chief investment officer at Jingxi Investment Management Co. “Though the economic data are weak, they are still within an acceptable range to investors.”

Below Estimates

Industrial production rose 6 percent from a year earlier in July, the National Bureau of Statistics said Friday. Retail sales climbed 10.2 percent last month, while fixed-asset investment increased 8.1 percent in the first seven months of the year. All three readings missed economists’ estimates.

Aggregate financing, China’s broadest measure of new credit, was at 487.9 billion yuan ($73.4 billion) in July, according to central bank data released after the market close on Friday. The figure is less than half the median estimate in a Bloomberg survey, and suggests monetary authorities are more concerned about swelling financial risks than giving more of a boost to old growth engines.

Data released earlier this week showed the nation’s factory-gate deflation eased for a seventh straight month, signaling improving conditions for the nation’s manufacturers.

The Hang Seng Index rose to 22,766.91. The Hang Seng China Enterprises Index advanced 1.4 percent, while the Shanghai Composite climbed to 3,050.67.

Earnings Push

China Mobile was the day’s biggest driver of the Hang Seng Index by points as it climbed 2.4 percent. The world’s largest phone carrier by users on Thursday reported a 5.6 percent increase in first-half net income after it added more 4G subscribers than the populations of the U.K. and Spain combined.

CK Hutchison, controlled by billionaire Li Ka-shing, advanced 2.7 percent. The company said profit, excluding earnings from discontinued operations, rose 1.9 percent to HK$15.2 billion ($2 billion) during the first six months of 2016, beating the HK$14.8 billion median estimate in a Bloomberg survey of six analysts.

Cheung Kong Property Holdings Ltd., also controlled by Li, slumped 3.9 percent, paring its advance from a January low to 41 percent. Developers in Hong Kong, where the currency is pegged to the U.S. dollar, have benefited this year from expectations that interest rates will stay lower for longer.

Sands China Ltd. climbed 2.4 percent, taking this week’s gain to 9.4 percent. Cnooc Ltd. added 3.2 percent and China Petroleum & Chemical Corp. rose 1.1 percent. Oil futures advanced as much as 1.6 percent, after surging 4.3 percent in New York on Thursday, amid speculation informal OPEC talks next month may lead to stabilization measures after prices tumbled into a bear market.

Langfang Development Co. jumped by the day’s 10 percent limit in Shanghai as trading resumed after China Evergrande Group signaled its ambition to take control of the firm, days after it disclosed a stake in China Vanke Co. A measure of property developers in the city jumped the most in five months, while Vanke gained 10 percent in Shenzhen.

— With assistance by Shidong Zhang

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