Bloomberg News

Hong Kong Stocks Advance After China Signals Economic Stimulus

October 26, 2011

Oct. 26 (Bloomberg) -- Hong Kong stocks climbed for a fourth day after China said it is considering policies to boost economic growth.

Anhui Conch Cement Co., China’s biggest producer of the material, rose 9.4 percent, the most in three weeks, after quarterly profit more than doubled. Aluminum Corp. of China Ltd., the nation’s largest producer of the metal, climbed 3.9 percent on higher earnings. Real-estate developers Cheung Kong Holdings Ltd. and Sun Hung Kai Properties Ltd. declined after Barclays Capital Research said Hong Kong office rents may fall as much as 40 percent in the next two years.

The Hang Seng Index advanced 0.5 percent to 19,066.54 as of 4:01 p.m. in Hong Kong. The gauge swung between gains and losses during the day, rising as much as 0.7 percent and falling as much as 1.4 percent. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong climbed 1.9 percent to 10,050.59.

“There’s increasing expectation that China will move away from its tightening policies,” said Hiroaki Hiwada, a strategist at Tokyo-based Toyo Securities Co. “That’s providing some boost to the market.”

Premier Wen Jiabao said China’s economic policy will be fine-tuned as needed and the industry ministry said it is studying “stimulative policies” for smaller companies. Wen’s comments fueled speculation the government may loosen lending restrictions, with Guotai Junan Securities Co. saying reserve requirements for smaller lenders may be cut before year-end.

Europe Summit

European leaders are today holding the 14th crisis summit in 21 months. They will discuss Greece’s second bailout, the recapitalization of banks and strengthening the 440 billion-euro ($612 billion) rescue fund. A finance ministers’ meeting scheduled to precede the Brussels summit was canceled yesterday.

Anhui Conch rallied 9.4 percent to HK$26.90. Samsung Securities said in a research report that Chinese cement prices may “rise mildly” in the fourth quarter.

Aluminum Corp., known as Chalco, climbed 3.9 percent to HK$4.05. The company posted net income of 555 million yuan ($87 million), compared with a net loss of 117.8 million yuan a year earlier, according to a Shanghai Stock Exchange filing yesterday.

Cheung Kong dropped 1.4 percent to HK$91.35, while Sun Hung Kai Properties retreated 1.3 percent to HK$102.90.

A hard landing for the rental market would drive vacancy rates as high as 8 percent by 2013, which are “levels consistent with the global financial crisis,” Barclays’ analysts Andrew Lawrence and Vivien Chan wrote in a report today. Rents may fall by between 10 percent and 15 percent in a “soft landing,” they said.

--With assistance from Marco Lui in Hong Kong and Yoshiaki Nohara in Tokyo. Editors: John McCluskey, Nick Gentle, Jim Powell.

To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net; 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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