Hong Kong Stocks Rise on China Economy, New Leaders in Europe
Hong Kong stocks rose for a second day as top Chinese economists said the country may engineer an economic “soft landing” and amid optimism new leaders in Italy and Greece will help contain Europe’s debt crisis.
China Overseas Land & Investment Ltd. (688) led a rally among mainland developers and lenders after new loans jumped last month by the most since June. HSBC Holdings Plc (HSBA), Europe’s No. 1 bank by market value, climbed 2.3 percent in Hong Kong. BYD Co., the automaker partly owned by Warren Buffett’s Berkshire Hathaway Inc., surged 26 percent after a report new-energy vehicles will be exempted from new-car restrictions in some Chinese cities.
“Valuations in Asia, particularly China, are cheap and central banks here have the ammunition to ease monetary policy if needed,” said Pauline Dan, Hong Kong-based chief investment officer at Samsung Asset Management, which oversees about $72 billion. “The appointment of new leaders in Europe will provide a short-term boost to investor sentiment but I don’t think this means we’re back on a positive growth path. Fundamentals haven’t really changed.”
The Hang Seng Index gained 1.9 percent to 19,508.18 at the 4:00 p.m. close in Hong Kong, with 10 stocks rising for each that fell in the 46-member benchmark. The gauge slumped 3.6 percent last week, the biggest weekly decline since Sept. 23, amid concern Italy’s leadership won’t be able to cope with the euro-zone’s debt crisis.
The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong jumped 2.8 percent to 10,716.90.
Want Want, Tingyi
Want Want China Holdings Ltd. (151) and Tingyi Cayman Islands Holding Corp. (322) advanced after the Hang Seng Indexes Co. said the stocks will be added to the benchmark on Dec. 5. Want Want, the nation’s biggest maker of rice cakes, surged 6.1 percent to HK$7.44.
Tingyi, which agreed this month to buy PepsiCo.’s China bottling operations, rose 4.3 percent to HK$21.80. The company pared gains of as much as 8.1 percent after announcing third- quarter net income dropped 35 percent on higher raw material costs.
Of the 44 companies on the Hang Seng Composite Index that reported results since Oct. 11, 14 missed analysts’ estimates, while eight exceeded expectations, according to data compiled by Bloomberg News.
Chinese banks and developers advanced after a report that new lending grew the most last month since June, signaling that the government may be easing credit curbs to support growth.
China Overseas Land, the biggest mainland developer listed in Hong Kong, jumped 6.2 percent to HK$14.12. State-owned China Resources Land Ltd. (1109) increased 4.1 percent to HK$11.76. Agricultural Bank of China, the nation’s largest lender by number of branches, climbed 2.8 percent to HK$3.64. Bank of China Ltd. (3988) advanced 2.2 percent to HK$2.76.
International Monetary Fund Deputy Managing Director Zhu Min and China’s National Economic Research Institute Director Fan Gang yesterday told the Asia-Pacific Economic Cooperation forum in Honolulu that the economy was heading for a “soft landing” as growth slows and inflation decelerates.
Stocks also advanced after Italian President Giorgio Napolitano asked Mario Monti, former European Union competition commissioner, to become the country’s new prime minister, and Greek Prime Minister Lucas Papademos, who was sworn in on Nov. 11, pledged to implement decisions from an Oct. 26 European summit to receive more loans and avoid default.
HSBC climbed 2.3 percent to HK$63.25. Standard Chartered Plc (STAN), the U.K.’s second-biggest lender by market value, rose 1.6 percent to HK$175.20.
U.S. Consumer Confidence
Exporters to the U.S. gained after a report showed confidence among American consumers rose more than expected in November.
Li & Fung Ltd. (494), a supplier of clothes and toys to Wal-Mart Stores Inc., jumped 6.3 percent to HK$15.50. Techtronic Industries Co. (669), a maker of power tools that counts North America as its largest market, advanced 4.6 percent to HK$7.49. Yue Yuen Industrial Holdings Ltd. (551), which makes shoes for Nike Inc., rose 2.5 percent to HK$22.55.
BYD, the Chinese maker of the E6 electric car, surged 26 percent to HK$20.85. New-energy automobiles will be exempt from some registration and traffic restrictions, Xinhua News Agency reported on Nov. 12, citing a government statement.
Futures on the Hang Seng Index (HSI) that expire this month rose 2.3 percent to 19,506. The HSI Volatility Index fell 6 percent to 32.95, indicating options traders expect a swing of 9.4 percent in the gauge in the next 30 days.
The Hang Seng Index has lost 17 percent this year through Nov. 11, sending its valuation to 10.6 times estimated earnings, according to data compiled by Bloomberg. The price earnings ratio reached a low of 9.4 times on Sept. 30.
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