Bloomberg News

Hong Kong Stocks Rise as China’s Growth Seen Remaining Above 9%

October 17, 2011

Oct. 17 (Bloomberg) -- Hong Kong’s Hang Seng Index rose, set to gain for a seventh day in eight, on optimism Europe’s debt crisis will be contained, and as economists said the Chinese economy probably grew more than 9 percent last quarter.

Esprit Holdings Ltd., a clothier whose biggest market is Europe, surged 7.9 percent. Anhui Conch Cement Co., China’s largest cement maker by market value, jumped 4.7 percent ahead of the release by the government of economic reports. Cnooc Ltd., China’s No. 1 offshore oil producer, increased 3.3 percent after commodity prices gained.

The Hang Seng Index rose 2 percent to 18,873.99 as of the 4 p.m. local time close of trade, with all but five stocks rising in the 46-member gauge. The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong gained 2.8 percent to 9,853.34. China’s gross domestic product, scheduled to be released tomorrow, grew 9.5 percent last quarter, according to the median estimate of economists surveyed by Bloomberg. Retail sales and industrial production figures are also set to be released tomorrow.

“There’s a bullish sentiment on the European debt issue,” driving a sharp rally in global equities, said Steven Leung, director of institutional sales in UOB-Kay Hian Holdings Ltd. in Hong Kong. “There was so much hard-landing concerns in China, but if we see that the third-quarter growth stand around 9 percent, those worries should be over.”

Yearly Slump

The Hang Seng Index tumbled 20 percent this year through Oct. 14, making it the worst-performing benchmark index among developed markets outside the euro zone. Shares dropped amid concern Europe’s debt crisis, China’s monetary tightening measures and a slowdown in the U.S. growth will derail the global economic recovery.

Companies on the index, which has gained 16 percent since its recent bottom on Oct. 4, traded at 10 times forecast earnings, at the last close, around March 2009 levels. That compares with 12.3 times for the Standard & Poor’s 500 Index.

Esprit surged 7.9 percent to HK$12.52. Hutchison Whampoa Ltd., an owner of ports in Germany and Spain, increased 3.4 percent to HK$71.75. Cosco Pacific Ltd., which operates container facilities at Greece’s Piraeus port, gained 2.7 percent to HK$10.14.

G-20 finance ministers and central banks concluded weekend talks in Paris, endorsing parts of an emerging plan to avoid a Greek debt default, bolster banks and curb contagion. They set an Oct. 23 summit of European leaders in Brussels as the deadline for it to be delivered.

‘Credible Solution’

“An important precondition for resolving the European credit crisis is unity of vision and commitment to find a solution,” said Angus Gluskie, who manages more than $300 million at White Funds Management in Sydney. “The comments over the weekend show some elements of both. A credible and well- executed solution is the next element, and we are yet to see this.”

Cnooc rose 3.3 percent to HK$13.72, while Jiangxi Copper Co., China’s No. 1 producer of the metal, jumped 6.2 percent to HK$17.54. Aluminum Corp. of China Ltd. known as Chalco, surged 6.7 percent HK$4.16.

New York-traded copper futures rose 3.1 percent on Oct. 14, while the London Metal Exchange Index of prices for six metals including copper and aluminum advanced 2.1 percent. Crude oil futures in New York gained 3.1 percent.

Geely Automobile Holdings Ltd., the unit of the Chinese automaker that owns Volvo Cars Corp., rose 5 percent to HK$2.11 after saying its September sales volume advanced about 0.5 percent to 32,430 units from a year earlier.

China Companies

Chinese companies rose ahead of the nation’s economic data. Anhui Conch Cement gained 4.7 percent to HK$26.85. China National Building Material Co., a maker of the building materials, surged 11 percent to HK$9.56. Cement producer China National Materials Co. advanced 8.9 percent to HK$3.69. China Yurun Food Group Ltd., a meat processor, increased 4.6 percent to HK$12.04.

Ping An Insurance Group Co., China’s No. 2 insurance company by market value, jumped 6.1 percent to HK$56.55 after saying in a pre-announcement its unit Shenzhen Development Bank Co.’s nine-month net profit rose as much as 70 percent from a year earlier.

Futures on the Hang Seng Index increased 2.1 percent to 18,809. The HSI Volatility Index sank 6.9 percent to 30.94, indicating options traders expect a swing of 9 percent in the Hang Seng Index in the next 30 days.

--Editor: John McCluskey

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.


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