Hong Kong Stocks Rebound From Seven-Week Low as Financials Rise

  • Orient Overseas surges after Cosco Shipping announces purchase
  • China June producer price index in line with analyst estimates

Cosco Offers to Buy Orient Overseas for $6.3 Billion

Hong Kong stocks rose, with the benchmark index climbing from a seven-week low, as HSBC Holdings Plc led financial shares higher and Orient Overseas International Ltd. jumped after being targeted for a takeover.

The Hang Seng Index advanced 0.6 percent to 25,500.06 at the close. Ping An Insurance rose 1.3 percent to a June 2015 high, while HSBC climbed 2 percent. Orient Overseas surged 20 percent after Cosco Shipping Holdings Co. said it would buy the container carrier for $6.3 billion. Cosco Shipping added 5.4 percent to the highest since December 2015. The Shanghai Composite Index declined 0.2 percent after fluctuating between gains and losses.

The rebound in the Hong Kong benchmark follows its worst week since March and Friday’s increase in U.S. equities spurred by broad-based American payroll gains. The gauge has rallied 16 percent this year, though further gains may be capped by additional tightening by the U.S. Federal Reserve.

"It looks like a technical rebound after losses in the past few days, while the Cosco-Orient Overseas deal also lifted sentiment," said Banny Lam, head of research at CEB International Investment Corp in Hong Kong. "Turnover is still low, so it remains to be seen if the gains will sustain into the week."

China’s producer price gains held up, signaling that demand in the world’s second-largest economy could remain robust even in the face of regulatory curbs. The producer price index rose 5.5 percent in June from a year earlier, compared with an estimated 5.5 percent in a Bloomberg survey, which was also the reading in May. The consumer price index increased 1.5 percent, versus a forecast of 1.6 percent, the nation’s statistics bureau said Monday.

  • Wanda Hotel Development Co. surged as much as 155% in Hong Kong on 337 times the three-month full-day average volume after its ultimate parent Wanda Group said it plans to sell hotel assets to Sunac China Holdings Ltd. A Wanda Hotel representative said the deal announced between its parent group and Sunac China has no direct impact on Wanda Hotel, the Hong Kong-listed company. Shares pared gains to 47%.
  • Chinese defense-related shares climbed amid rising tensions in disputed areas along borders with Bhutan, India and Pakistan, according to Jianbo Sun, president at China Vision Capital. AviChina Industry & Technology Co. jumped 5.8% in Hong Kong, while China Harzone Industry Corp. rose 2.9% in Shenzhen after earlier surging by the 10% daily limit. Investor interest was also fueled by Friday’s news that China will start transforming 41 national defense research centers into companies, Sun said.
  • A gauge of mainland-listed brokerages advanced to the highest since April after Orient Securities Co. and Guosen Securities Co. reported June earnings that jumped from a month earlier. Orient rose 4% in Shanghai, while Guosen climbed 1% in Shenzhen.
  • Link REIT advanced 3.3 percent after UBS Group AG raised its rating on the stock and boosted the price target to 19% above Friday’s close.
  • Net buying of Hong Kong-traded equities via the southbound links with Shanghai and Shenzhen reached 3.15b yuan ($463m), the most since June 1.

— With assistance by Amanda Wang, Will Davies, and Ronnie Harui

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