Bloomberg News

Hong Kong Stocks Advance After China Pledges Support for Europe

February 15, 2012

Feb. 15 (Bloomberg) -- Hong Kong stocks rose, with the Hang Seng Index closing at a six-month high, as developers gained amid speculation the city’s property prices will rise and after China said it will help Europe resolve its debt crisis.

Henderson Land Development Co. jumped 6.1 percent after Bank of Communications Co. rated the city’s property industry “outperform.” Shimao Property Holdings Ltd., which gets all its revenue from China, rose 3 percent after a report the nation may expand funding for affordable housing projects. Hutchison Whampoa Ltd., which gets 53 percent of its sales in Europe, advanced 2.8 percent.

China’s pledge is “giving the market more confidence the European debt problem will stabilize,” said Linus Yip, a strategist at First Shanghai Securities. Positive news on Hong Kong’s housing market is “giving local property players an excuse to extend their upmove and buying interest in the market.”

The Hang Seng Index rose 2.1 percent to 21,365.23, its highest close since Aug. 4. All but four stocks gained in the 48-member gauge. Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong climbed 2.4 percent to 11,685.73.

“China will always adhere to the principle of holding assets of EU sovereign debt,” People’s Bank of China Governor Zhou Xiaochuan said in a speech in Beijing today. “We would participate in resolving the euro debt crisis.”

China Involvement

Premier Wen Jiabao yesterday at a joint press conference with European Union President Herman Van Rompuy said the China is willing to get “more deeply” involved in resolving Europe’s debt crisis.

Hutchison Whampoa rose 2.8 percent to HK$78.30 today, while Cosco Pacific Ltd., which operates ports in Greece, advanced 4.1 percent to HK$12.60.

Futures on the Standard & Poor’s 500 Index gained 0.4 percent today. The index lost 0.1 percent in New York yesterday as U.S. retail sales missed estimates and European finance ministers canceled a meeting scheduled for today.

Hong Kong’s Hang Seng Index rose 16 percent this year as speculation China will ease its monetary policy and optimism for a U.S. economic recovery boosted confidence in global growth. Shares in the Hang Seng Index trade at 10.8 times estimated earnings at the last close, compared with 13 times for the Standard & Poor’s 500 Index and 10.9 times for the Stoxx Europe 600 Index.

Developers Rise

Developers gained after Bank of Communications predicted rising property transactions in the next three months and said prices will increase 10 percent this year. Real estate companies gained yesterday after Nomura Holdings Inc. said it’s bullish on the shares.

Henderson Land jumped 6.1 percent to HK$48.15, while Sun Hung Kai Properties Ltd., the world’s biggest developer by market value, increased 4.3 percent to HK$118.70.

Sino Land Co., a developer controlled by billionaire Robert Ng, gained 4 percent to HK$13.62 after Citigroup Inc. said it’s the top Hong Kong property stock pick. The bank raised its target price on the shares to HK$18.59 from HK$13.90.

Mainland developers also rose after Shanghai Securities News said the housing ministry may allow more home-buying subsidies to be used for building affordable housing, citing an unidentified person.

Shimao Property rose 3 percent to HK$9.35. China Resources Land Ltd. gained 1.8 percent to HK$14.82, while China Overseas Land & Investment Ltd., a state-owned builder, advanced 2.5 percent to HK$15.48.

Anhui Conch Cement Co., China’s biggest producer of the material, rose 4.6 percent to HK$27.35 while China National Building Material Co. increased 6.9 percent to HK$10.52.

China Railway Construction Corp., a builder of the nation’s rail system, jumped 6.6 percent to HK$5.97 after saying it won $1.45 billion worth of contracts in Nigeria and Djibouti. CSR Corp., China’s biggest train maker, rose 5.8 percent to HK$5.69.

Futures on the Hang Seng Index expiring this month rose 2.1 percent to 21,415. The HSI Volatility Index slumped 2.9 percent to 21.62, indicating options traders expect a swing of 6.2 percent in the benchmark over the next 30 days.

--Editor: Jason Clenfield.

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


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