Feb. 2 (Bloomberg) -- Hong Kong stocks advanced, with the Hang Seng Index heading toward its highest close in five months, as expanding manufacturing in the U.S., Europe and Asia boosted confidence the global economy is recovering.
Techtronic Industries Co., the maker of Ryobi power tools that counts North America as its top market, jumped 5.3 percent. Esprit Holdings Ltd., a Hong Kong-based clothier that gets about 79 percent of sales from Europe, climbed 5.5 percent after moving to close unprofitable stores in North America. Geely Automobile Holdings Ltd. led Chinese carmakers higher on speculation car sales in the mainland will increase.
“Prospects for the market this year are much better given signs of improvements in the U.S. economy,” said Cedric Ma, Hong Kong-based senior investment strategist at Convoy Asset Management Ltd., which oversees about $200 million. “A pullback in February following last month’s rally will be a good opportunity to buy equities.”
The Hang Seng Index gained 2 percent 20,739.45, its highest close since Aug. 5. The gauge climbed 11 percent last month amid bets China will ease lending curbs and on signs the U.S. economy is improving and Europe will contain its debt crisis. The Hang Seng China Enterprises Index of mainland companies listed in the city climbed 2.9 percent to 11,583.47.
Futures on the Standard & Poor’s 500 Index added 0.2 percent today. The measure advanced gained 0.9 percent in New York yesterday after reports showed manufacturing in the U.S. grew in January at the fastest pace in seven months.
Exporters advanced as manufacturing growth in Europe and Asia added to signs the global economy is recovering. Reports yesterday showed a gauge of U.K. manufacturing jumped to an eight-month high and German output grew for the first time since September. Data from China and India also showed rising factory activity.
Techtronic Industries climbed 5.3 percent to HK$9.07. Li & Fung Ltd., the supplier of toys and clothes for retailers including Wal-Mart Stores Inc., gained 1.6 percent to HK$16.92.
Esprit rose 5.5 percent to HK$12.20 as the retailer decided to shut its unprofitable North American business and focus on “finding one or more license partners” to maintain its presence in the U.S. Canada.
Raw material producers led the gains among the 11 industry groups in the Hang Seng Composite Index as metal futures advanced. The London Metals Exchange Index, which tracks prices of industrial metals including aluminum and copper, rose 1.2 percent yesterday, snapping a three-day slump.
Jiangxi Copper Co., China’s biggest supplier of the metal, increased 4.2 percent to HK$20.45. Aluminum Corp. of China Ltd., the nation’s top producer of the light alloy, gained 3.8 percent to HK$3.86.
Glencore International Plc jumped 5.5 percent to HK$53.45 before trading was suspended in Hong Kong. Xstrata Plc said it is in talks with Glencore, its biggest shareholder, regarding an all-share “merger of equals” after the world’s biggest commodity trader made an approach.
Ping An Insurance Group Co. rose 5.3 percent to HK$64.20 after Goldman Sachs Group Inc. added China’s second-largest insurer to a list of stocks to buy.
Chinese retailers advanced after Macquarie Group Ltd. said sales increased during last week’s Lunar New Year holidays.
Belle International Holdings Ltd., China’s biggest shoe retailer, gained 4.8 percent to HK$13.62. Gome Electrical Appliances Holdings Ltd., the nation’s second-biggest electronics retailer, rose 3.2 percent to HK$1.93.
Chinese automakers also rallied after Daiwa Securities Group Inc. predicted a “double-digit” gain in the mainland’s vehicle sales.
Geely, whose parent owns Swedish automaker Volvo AB, surged 7.8 percent to HK$2.36. BYD Co., the Chinese carmaker partly owned by Warren Buffett’s Berkshire Hathaway Inc., climbed 3.8 percent to HK$24.55. Brilliance China Automotive Holdings Ltd., a partner of Bayerische Motoren Werke AG, added 1.8 percent to HK$8.13.
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. Shares on the gauge were trading at 1.5 times estimated book value as of yesterday, compared with 2.2 times for the S&P 500.
Futures on the Hang Seng index advanced 1.9 percent to 20,772 today. The HSI Volatility Index dropped 3.5 percent to 22.66, indicating traders expect a swing of 6.5 percent on the benchmark over the next 30 days.
--Editors: Jim Powell, Nick Gentle
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