Bloomberg News

Hong Kong Stocks Climb on Greece Progress, China’s ‘Fine Tuning’

February 13, 2012

Feb. 13 (Bloomberg) -- Hong Kong stocks climbed, with the Hang Seng Index rising for the first time in three days, as China’s premier said the country should start “fine tuning” economic policies this quarter and Greece’s parliament voted for austerity measures.

Esprit Holdings Ltd., a clothier that gets most of its revenue from Europe, climbed 4.5 percent as Greece’s parliament voted in favor of policies to secure international financial aid. China Construction Bank Corp., the nation’s second-largest lender, rose 1.3 percent. China Resources Land Ltd., a mainland developer, slid 5.8 percent as the nation’s new lending in January missed estimates and the eastern city of Wuhu backtracked on proposals to ease real-estate market controls.

“One concern is out of the way, definitely,” said Binay Chandgothia, Hong Kong-based portfolio manager at Principal Global Investors on Bloomberg Television. “It’s one deterrent out of the way. It allows Greece to honor its next bond payment, it allows them to get the next round of support from the troika.”

The Hang Seng Index climbed 0.5 percent to 20,887.40 at the midday-trading break, with more than three stocks rising for each that fell. The gauge dropped as much as 0.5 percent earlier. The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong climbed 0.6 percent to 11,467.66.

Hong Kong’s equity benchmark rose 13 percent this year through Feb. 10 amid improved economic data in the U.S. and speculation that China’s government will wind back some of its anti-inflation policies to combat slower growth.

Volatility Index

Shares in the Hang Seng Index trade at 10.6 times estimated earnings compared with 12.9 times for the Standard & Poor’s 500 Index and 10.8 times for the Stoxx Europe 600 Index.

Futures on the Hang Seng Index expiring this month rose 0.5 percent to 20,900. The HSI Volatility Index fell 1.1 percent to 23.31, indicating options traders expect a swing of 6.7 percent in the benchmark over the next 30 days.

Esprit rose 4.5 percent to HK$14.94, the steepest gain on the Hang Seng Index. Cosco Pacific Ltd., which operates ports in Greece, increased 2 percent to HK$12.34.

Greek Prime Minister Lucas Papademos won parliamentary approval for austerity measures to secure a 130 billion euro ($172 billion) international bailout as rioters protesting the cuts battled police and set fire to buildings in Athens.

“It’s a confidence builder in terms of Greece’s willingness to implement reform,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney.

Wen Comments

China Construction Bank climbed 1.3 percent to HK$6.30 and Bank of Communications Co. rose 1.3 percent to HK$6.07. Premier Wen Jiabao said the nation needs to start “fine-tuning” economic policies this quarter. Economic circumstances in January and the first quarter deserve attention, Wen told business executives last week in Beijing, the official Xinhua News Agency reported yesterday.

Wen’s comments “boosted sentiment but this is nothing different from what he had said back in December,” Helen Zhu, a strategist at Goldman Sachs Group Inc., said in a Bloomberg Television interview in Hong Kong. “Policy makers actually have a lot of different policy areas they can fine tune. We think that earnings risk for the banking sector is pretty low this year, and as we see more of the cyclical loosening it’s likely to act as a catalyst.”

A measure of developers had the only decline among the Hang Seng Index’s four industry groups. China Resources Land sank 5.8 percent to HK$13.98, and China Overseas Land & Investment, a state-owned builder, fell 4.8 percent to HK$14.58. Greentown China Holdings Ltd., a builder of residential villas in and low- rise apartment buildings, tumbled 8.1 percent to HK$4.10.

China’s eastern city of Wuhu suspended a decision to ease property curbs three days after its announcement. The mid-sized city in Anhui province will temporarily suspend its home subsidy policy so it can study details on how to implement the rules, according to a statement on the local authority’s website yesterday.

Lending Slows

China’s banks extended 738.1 billion yuan ($117 billion) of new yuan-denominated loans last month, the lowest January lending figure in five years, according to data released by the People’s Bank of China Feb. 10. That compares with the median forecast of 1 trillion yuan in a Bloomberg News survey of 26 economists and 641 billion yuan in December.

“The new lending data and the backpedaling of Wuhu’s home subsidy policy mean the magnitude of policy easing is much smaller than expected,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “Declines in economic and profit growth are still going on.”

China Yurun Food Group Ltd., a mainland meat producer, dropped as much as 22 percent to HK$10.70 after forecasting full year profit will drop about 38 percent.

--With assistance from Ben Sharples in Melbourne and Susan Li in Hong Kong. Editor: Nick Gentle

To contact the reporter on this story: Kana Nishizawa in Hong Kong at

To contact the editor responsible for this story: Nick Gentle at

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