Bloomberg News

Most Hong Kong Stocks Rise as Greece Talks Temper China Concern

February 09, 2012

Feb. 9 (Bloomberg) -- Most Hong Kong stocks gained, as optimism Greece will secure a second bailout eased concern that China will maintain anti-inflation policies after price gains unexpectedly accelerated in January.

Cosco Pacific Ltd., which operates ports in Greece, gained 3.3 percent. Jiangxi Copper Co., China’s No. 1 producer of the metal, gained 2.1 percent after commodity prices rose. Mainland developers extended gains for a second day after China’s central bank said it will support first-home purchases. Industrial & Commercial Bank of China Ltd. fell 0.9 percent after price gains quickened for the first time in six months, limiting room for monetary easing.

More than three stocks gained for each that declined in the Hang Seng Composite Index. The city’s benchmark Hang Seng Index slid less than 21,010.01 at the close, while the Hang Seng China Enterprises Index of mainland companies listed in Hong Kong fell 0.3 percent to 11,669.15.

“History tells us that a deal in Greece will be reached at the last minute,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “A lot of indications show they are heading in that direction even though there are endless delays.”

The Hang Seng last week posted its longest weekly winning streak since October 2010 as positive U.S. economic reports boosted optimism global demand will grow. Companies in the gauge trade at 10.6 times forecast earnings, 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.

U.S. Futures

Futures on the Standard & Poor’s 500 Index dropped 0.3 percent today. The benchmark gauge advanced 0.2 percent to a seven-month high in New York yesterday as Greek Prime Minister Lucas Papademos met with domestic political leaders to discuss terms required to secure a second bailout.

Papademos and three party leaders “agreed on all the points of the program with the exception of one which requires further elaboration and discussion” with the so-called troika of lenders, made up of the European Commission, the European Central Bank and the International Monetary Fund, according to a statement from the premier’s office.

Cosco Pacific rose 3.3 percent to HK$12.40. Esprit Holdings Ltd., which depends on Europe for most of its sales, advanced 5.4 percent to HK$14.44.

China’s Inflation

In China, consumer prices rose 4.5 percent from a year earlier, the National Bureau of Statistics said today. That was faster than the median 4 percent estimate in a Bloomberg News survey of economists and 4.1 percent in December. The data may have been distorted by the Chinese New Year holiday.

ICBC, the mainland’s biggest lender, slid 0.9 percent to HK$5.46, while China Construction Bank Corp. retreated 0.6 percent to HK$6.35.

“The prospect of China easing isn’t much but people are more bullish on the U.S. and the global recovery, so easing in China may not be important in the near term,” said Alex Wong, asset-management director at Ample Capital Ltd. in Hong Kong.

Jiangxi Copper rose 2.1 percent to HK$22, and Aluminum Corp. of China Ltd., the nation’s No. 1 supplier of the light metal, gained 4.4 percent to HK$4.30 after the London Metal Exchange Index of prices for six industrial metals including copper and aluminum rose 0.5 percent yesterday.

China Resources Land Ltd., a state-owned developer, jumped 5.7 percent to HK$14.76 and China Overseas Land & Investment rose 1.7 percent to HK$15.50, extending yesterday’s gains after the People’s Bank of China said on its website on Feb. 7 officials will increase support for construction of affordable housing and ensure that “loan demand from first-home families” is met.

Li Ning Co., a mainland sportswear retailer, soared 14 percent to HK$9.80 after Goldman Sachs Group Inc. added the stock to its conviction buy list in a report dated today.

Futures on the Hang Seng Index fell 0.8 percent to 20,954 today. The HSI Volatility Index rose 4.2 percent to 22.73, indicating options traders expect a swing of 6.5 percent in the benchmark over the next 30 days.

--Editors: John McCluskey, Jason Clenfield.

To contact the reporters on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net.

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


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