Bloomberg News

Hong Kong Stocks Climb to Four-Month High as Exports Increase

January 29, 2012

Jan. 27 (Bloomberg) -- Hong Kong stocks advanced for a sixth day, with the Hang Seng Index closing at its highest level in more than four months, after a report the city’s exports increased for a third month and solar panel makers rallied.

Esprit Holdings Ltd., which gets about 80 percent of its sales in Europe, increased 3.4 percent. Trony Solar Holdings Co. led gains among solar panel makers after Germany voted to keep industry subsidies and executives at top companies said China’s market for the technology will double this year. Agile Property Holdings Ltd., a Chinese real estate developer, dropped 3.8 percent after a mainland lawmaker said housing prices must fall.

“Fund flows have returned with a vengeance in the last couple of weeks,” Arnout Van Rijn, chief investment officer for Robeco Groep NV’s Hong Kong division, said in a Bloomberg television interview. “That sets the stage for a powerful rally. Valuations are very cheap throughout Asia.”

The Hang Seng Index added 0.3 percent to 20,501.67, its highest close since Sept. 1. The measure gained 2 percent this week, its fourth weekly advance, amid bets China will act to spur economic growth and on signs the U.S. economy is weathering Europe’s debt crisis.

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong rose 0.3 percent to 11,446.52. Markets in China will resume trading on Jan. 30 following a week-long Lunar New Year holiday.

Exporters Rally

Exporters advanced after a report showed Hong Kong’s shipments increased 7.4 percent in December, beating economist estimates, supported by demand from China. Demand for Asia’s products may increase as the Federal Reserve’s pledge to keep interest rates near zero helps boost growth in the world’s biggest economy, according to Castor Pang, head of research at Core-Pacific Yamaichi International Ltd. in Hong Kong.

Esprit climbed 3.4 percent to HK$11.74. Li & Fung Ltd., a supplier of toys and clothes to Wal-Mart Stores Inc., advanced 3.4 percent to HK$18.40. Yue Yuen Industrial Holdings Ltd., which makes shoes for Nike Inc., rose 2.6 percent to HK$23.80.

Futures on the Standard & Poor’s 500 Index slipped 0.3 percent. The gauge fell 0.6 percent yesterday as banks dropped on concern the Fed’s policy of keeping interest rates low will hurt lenders’ profits.

Shares traded within a narrow range in Hong Kong amid mixed signals from the U.S. on the health of the world’s biggest economy. Sales of new U.S. homes unexpectedly declined in December for the first time in four months, while orders for durable goods advanced more than forecast, reports showed yesterday.

‘Huge Market’

Solar panel makers rallied after a proposal in Germany to cut subsidies failed to get unanimous backing, according to a lawmaker. Shares also rose after Zhengrong Shi, chief executive officer at Suntech Power Holdings Co., and Trina Solar Ltd. CEO Jifan Gao said China may double its panel installations this year.

Trony Solar, which manufactures solar equipment, jumped 5.1 percent to HK$1.23. GCL-Poly Energy Holdings Ltd., a supplier of panel materials, gained 2.8 percent to HK$2.56.

“It’s a huge market,” Trina Solar’s Gao said in an interview at the World Economic Forum’s annual meeting in Davos, Switzerland. “Excellent companies with good technology, balance sheets and also brands will win out.”

The Hang Seng Index tumbled 20 percent last year amid concern China would continue to curb lending and Europe would fail to resolve its debt crisis. Companies in the gauge traded at 10.3 times forecast earnings at the last close, down from 14.4 times at the beginning of 2011, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index trades at 12.6 times.

Developers Fall

Chinese developers retreated after a mainland lawmaker, speaking in an interview on China National Radio, said residential property prices need to fall 30 percent.

Agile Property dropped 3.8 percent to HK$9.18. China Overseas Land & Investment Ltd., the biggest mainland real estate company listed in Hong Kong, slipped 3.4 percent to HK$14.98. Soho China Ltd., a homebuilder in Beijing and Shanghai, sank 3 percent to HK$5.24.

Futures on the Hang Seng Index gained 0.9 percent to 20,594. The HSI Volatility Index slid 1.6 percent to 22.21 today, indicating options traders expect a swing of 6.4 percent on the benchmark over the next 30 days.

“The market looks overbought following the recent rally,” said Michiya Tomita, a Hong Kong-based fund manager at Mitsubishi UFJ Asset Management Co., which oversees $65 billion globally. “People are still skeptical whether this rally can be sustained given prevailing problems in Europe.”

--Editors: Drew Gibson, Jason Clenfield

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

To contact the editor responsible for this story: John McCluskey at j.mccluskey@bloomberg.net


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