Bloomberg News

Hong Kong Stocks Pare First Annual Slide Since ’08 on U.S. Data

December 30, 2011

Dec. 30 (Bloomberg) -- Hong Kong stocks rose for the first time this week as U.S. home sales grew faster than estimated and jobless claims fell to the lowest in three years, boosting the outlook for the world’s largest economy.

HSBC Holdings Plc, a bank that gets about 20 percent of revenue from the U.S., climbed 1 percent. Techtronic Industries Co., which makes Ryobi power tools, gained 0.9 percent. Noble House China Holdings Ltd., an operator of restaurants in the mainland, surged 40 percent on its first day of trading.

The Hang Seng Index climbed 0.2 percent to 18,434.39 at the close, snapping two days of losses and paring the gauge’s first annual decline since 2008. Twenty-two stocks gained while 20 fell in the 48-member benchmark amid volume that was less than half the 100-day average, according to data compiled by Bloomberg.

“Investors increasingly feel the U.S. economy is firmer than they had expected,” said Toshiyuki Kanayama, a market analyst at Tokyo-based Monex Inc. “The economic data is looking good and that will boost stock markets, especially when concern about Europe’s debt issues aren’t in the forefront.”

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong slid 0.1 percent to 9,936.48 after the country’s manufacturing contracted for a second month amid a crackdown on property-market speculation and as Europe’s sovereign-debt crisis dented global demand.

Biggest Decliners

The Hang Seng Index fell 20 percent this year as banks and developers dropped on China’s measures to curb inflation and property prices. Esprit Holdings Ltd., a clothier that counts Europe as its biggest market, led 2011’s declines on the gauge, falling 73 percent on concern Europe’s failure to contain its debt crisis will further undermine the brand in its biggest market.

Measures of industrial goods, raw material and property and construction companies fell the most in the broader Hang Seng Composite Index this year, tumbling more than 25 percent. Utilities and telecommunications were the only industries of 11 in the gauge to advance, each rising less than 3 percent.

Companies in the Hang Seng Index, which climbed 1.9 percent last week, traded at 10 times forecast earnings, down from 14.4 times at the end of last year, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index traded at 12.8 times.

Futures on the Standard & Poor’s 500 Index were little changed today. The benchmark for U.S. stocks rose 1.1 percent yesterday, restoring the gauge’s 2011 gain, as data signaled the world’s largest economy is weathering Europe’s debt crisis.

U.S. Reports

HSBC gained 1 percent to HK$59, and Techtronic advanced 0.9 percent to HK$7.99.

Stocks advanced as companies cranked out more goods in December and pending sales of existing homes jumped in November for a second month, pointing to a pickup in U.S. economic growth as 2011 comes to a close. The number of Americans filing claims for jobless benefits dropped to 375,000 on average over the past four weeks, the fewest since June 2008, Labor Department figures showed.

Noble House China surged 40 percent to HK$1.01 in its market debut. Guodian Technology & Environment Group Corp., a maker of environmental protection equipment, was unchanged from its initial public offering price of HK$2.16 on its first day of trading.

Among stocks that fell, China Mengniu Dairy Co., which this week said excessive levels of a toxin were found in its milk, slid 1.9 percent to HK$18.16, extending its drop.

Futures on the Hang Seng Index rose 0.8 percent to 18,456. The HSI Volatility Index retreated 1.4 percent to 24.62, indicating options traders expect a swing of 7.1 percent in the benchmark over the next 30 days.

--Editors: Jason Clenfield, Jim Powell.

To contact the reporter on this story: Nick Gentle in Hong Kong at ngentle2@bloomberg.net

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


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