Hong Kong stocks swung between gains and losses as optimism about positive U.S. economic reports was overshadowed by disagreements among European leaders ahead of a summit on the region’s debt crisis today.
China Shipping Container Lines Co. (2866), which gets about 23 percent of revenue from Europe, slipped 1.1 percent. Techtronic Industries Co. (669), a maker of Ryobi power tools that counts North America as its biggest market, rose for a fourth day, adding 1.5 percent. Luk Fook Holdings International Ltd. climbed 2.1 percent after the jewelry retailer posted higher full-year earnings.
The Hang Seng Index added 0.2 percent to 19,213.03 as of the midday trading break in Hong Kong, having swung between gains of as much as 0.7 percent and losses of 0.2 percent. The measure retreated about 11 percent from this year’s high in February through yesterday amid concern that growth in the U.S. and China is slowing, and as Europe’s debt crisis spread.
“Market sentiment is still very poor,” said Lewis Wan, chief investment officer at Pride Investments Group Ltd. in Hong Kong. “There’s a lack of confidence ahead of the European summit.”
Stocks in the city climbed yesterday after China announced plans to increase integration between Hong Kong and mainland Chinese markets ahead of a visit to the city by President Hu Jintao this weekend. July 1 marks the 15th anniversary of Hong Kong’s reversion to Chinese rule.
Europe’s leaders will meet today in Brussels. There’s been a breakdown in consensus on how to safeguard the governments of Spain and Italy from surging borrowing costs. German Chancellor Angela Merkel is increasingly isolated as French President Francois Hollande, Italian Prime Minister Mario Monti and Spanish Premier Mariano Rajoy unite to push for quicker action.
The Hang Seng China Enterprises Index (HSCEI) of Chinese companies listed in Hong Kong lost 0.4 to 9,419.73. Economic data this weekend may show China’s manufacturing is contracting. The Purchasing Managers’ Index compiled by the statistics bureau and logistics federation may drop to 49.8 this month, falling below the dividing line of 50 for expansion and contraction, according to the median estimate of 19 economists in a Bloomberg survey. The figure is due July 1.
Futures on the Standard & Poor’s 500 Index rose less than 0.1 percent today. The stock gauge gained 0.9 percent in New York yesterday as orders for durable goods and the number of Americans signing contracts to buy an existing home rebounded in May.
Losses on the Hang Seng Index (HSI) dragged the value of stocks in the gauge to 9.9 times estimated earnings on average as of yesterday, compared with 12.8 times for the S&P 500 and 10.3 times for the Stoxx Europe 600 Index
Futures on Hong Kong’s benchmark stock index expiring this month gained 0.3 percent to 19,214. The HSI Volatility Index (VHSI) added 0.1 percent to 21.07, indicating options traders expect a swing of about 6 percent on the gauge during the next 30 days.
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