Hong Kong Stocks Rise on China Property Support, Greek Outlook
February 08, 2012, 8:36 PM ESTBy Kana Nishizawa
Feb. 8 (Bloomberg) -- Hong Kong stocks rose for the first time in three days after China’s central bank said it will support first-home purchases and as debt-laden Greece moved closer to securing a bailout.
China Resources Land Ltd., a state-owned developer, increased 2.7 percent. HSBC Holdings Plc, Europe’s largest bank by market value, advanced 1.4 percent. China Petroleum & Chemical Corp., the nation’s biggest refiner, climbed 1.3 percent after the government raised domestic fuel tariffs for the first time in 10 months. United Co. Rusal, a Russian aluminum company, jumped 6.1 percent after metal prices gained.
The Hang Seng Index advanced 1.5 percent to 21,005.67 as of 3:20 p.m. local time, with all but three stocks rising on the 48-member gauge. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong gained 1.8 percent to 11,707.66 ahead of a report due tomorrow that will probably show China’s consumer prices slowed, rising 4 percent in January from a 4.1 percent gain the month before, according to economists’ estimates compiled by Bloomberg.
“People are optimistic Greece will reach an accord and avert a default, helping the market rebound,” said Francis Lun, managing director at Lyncean Holdings Ltd. “A weak European economy remains a risk.” China’s property support is helping to boost developers, he said.
2011 Tumble
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 10.5 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 12.9 times.
Stocks extended gains in late trading amid speculation slowing inflation in China will give more room for the central bank to ease monetary policy.
“It looks like the market is pricing in expectations about pretty low inflation tomorrow, which will allow the government to relax its tight monetary policies such as a cut in the reserve-requirement ratio,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million.
Futures on the Standard & Poor’s 500 Index gained 0.2 percent today. The benchmark gauge rose 0.2 percent in New York yesterday, reversing losses of as much as 0.6 percent, as Greece made progress on measures to secure international aid.
Greek Talks
Greek Prime Minister Lucas Papademos postponed a meeting with heads of political parties supporting his government for a second time in as many days as he continued to haggle with international creditors over terms to secure aid.
Papademos instead met with the so-called troika, comprising the European Commission, the European Central Bank and the International Monetary Fund, to put the final touches on terms required for a 130 billion-euro ($172 billion) rescue package, a spokeswoman said. He will meet with the leaders of the political parties in Athens today.
HSBC gained 1.4 percent to HK$68.35. Cosco Pacific Ltd., which operates ports in Greece, rose 1.7 percent to HK$12.02.
“The Greek debt situation will be resolved in some shape or form, which will provide certainty,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “By eliminating part of that downside risk, people are more comfortable in allocating toward risk assets.”
Property Developers
A measure of property developers had the biggest gain among the Hang Seng Index’s four industry groups. China Resources Land climbed 2.7 percent to HK$13.90 and Shimao Property Holdings Ltd., which gets all its revenue from China, increased 2.7 percent to HK$8.43. Cement producers also gained. Anhui Conch Cement Co., China’s biggest producer of the material, jumped 5.1 percent to HK$27.70, while China National Building Material Co. increased 7.2 percent to HK$10.04.
The People’s Bank of China said on its website yesterday officials will increase support for construction of affordable housing and ensure that “loan demand from first-home families” is met.
China Petroleum & Chemical, known as Sinopec, gained 1.3 percent to HK$9.40 and PetroChina Co., the mainland’s biggest oil producer, climbed 2.2 percent to HK$11.86 after the nation raised domestic fuel tariffs for the first time in 10 months to spur production by refiners. Retail gasoline and diesel cost 300 yuan ($47.65) a metric ton more starting today, the National Development and Reform Commission said on its website yesterday.
Metal Prices
United Co. Rusal jumped 6.1 percent to HK$6.80 and Minmetals Resources Ltd., a copper and alumina producer, advanced 7.9 percent to HK$4.12 after the London Metal Exchange Index of prices for six industrial metals including copper and aluminum rose 0.4 percent yesterday.
BYD Co., the Chinese automaker backed by Warren Buffett’s Berkshire Hathaway Inc., jumped 7 percent to HK$27.70, extending yesterday’s gains after BNP Paribas SA said sales of its new sport-utility vehicle probably rose to a record in January.
Futures on the Hang Seng Index added 1.2 percent to 21,028 today. The HSI Volatility Index lost 3.7 percent to 21.88, indicating options traders expect a swing of 6.3 percent in the benchmark over the next 30 days.
--With assistance from Yoshiaki Nohara in Tokyo and Zhang Shidong in Shanghai. Editors: Jason Clenfield, Jim Powell.
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
