Hong Kong Stocks Rise Fifth Day on China Support Package
Hong Kong stocks rose, with the benchmark index headed for its longest winning streak since Jaunary. Mainland shares listed in the city gained after the government outlined a package of measures to support growth highlighted by railway spending.
China Railway Group Ltd. (390) jumped the most in seven months after the government said it will sell 150 billion yuan ($24 billion) of bonds this year to build lines mainly in less-developed regions. Anhui Conch (914) Cement Co., the nation’s biggest producer of the building material, climbed 3.2 percent. Prada SpA sank 5 percent in Hong Kong after the Italian handbag maker forecast slower luxury sales growth.
The Hang Seng Index (HSI) climbed 0.2 percent to 22,565.08 at the close, completing its longest winning streak since Jan. 2. The Hang Seng China Enterprises Index, also known as the H-Share index, added 0.7 percent to 10,093.80. China is introducing policies to boost the economy as a slowdown endangers Premier Li Keqing’s 7.5 percent annual expansion target.
“The pro-growth measures will at least boost stocks in the short term and infrastructure-related companies will benefit the most,” said Wu Kan, a money manager at Dragon Life Insurance Co. in Shanghai, which oversees about $3.3 billion.
The Hang Seng Index is the second-worst performer among developed markets this year. The gauge traded at 10.4 times estimated earnings, compared with 16.1 times for the Standard & Poor’s 500 Index yesterday. Trading volume on the Hong Kong gauge at today’s close was 21 percent lower than the 30-day intraday average, according to data compiled by Bloomberg.
China’s State Council said in the statement yesterday the nation will extend a preferential tax policy to more small companies and increase financing to build low-income housing. Authorities will create a development fund of 200 billion yuan to 300 billion yuan a year to increase sources of rail financing.
China Railway Group rose 5.1 percent to HK$3.92. China Railway Construction Corp., builder of more than half the nation’s rail links since 1949, surged 7.2 percent to HK$7.43. Anhui Conch gained 3.2 percent to HK$35.60, while China National Building Material Co. advanced 3.3 percent to HK$8.15.
“It’s a mini-stimulus package designed to stabilize growth,” said Xu Gao, chief economist at Everbright Securities Co. in Beijing. “As the growth rate is decelerating to the lower end of a reasonable range, Premier Li is trying to do something to get growth back on track.”
Two Chinese manufacturing gauges released on April 1 pointed to weakness in the economy last month, with a Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics falling to the lowest level since July. A service industries index from the government declined in March, indicating a slower pace of expansion, a report showed today.
Hong Kong Exchanges & Clearing Ltd. rose 0.6 percent to HK$126.80, its highest close since Jan. 22. Citic Securities Co., China’s biggest publicly traded brokerage, added 0.7 percent to HK$16.84..
The Hong Kong bourse operator said talking with mainland counterparts on establishing mutual access after a Chinese newspaper reported that Shanghai’s exchange may pass stock orders for overseas markets to HKEx for execution.
The 21st Century Business Herald reported that foreign investors may be able to directly buy mainland-listed stocks through the Hong Kong exchange, without saying where it got the information. Mainland individual investors would access overseas markets through the Shanghai bourse and executed by HKEx, the newspaper also said.
Prada dropped 5 percent to HK$58.65 after forecasting slower luxury sales growth this year amid a maturing Chinese market and softer demand in Europe.
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