Bloomberg News

Hong Kong Stocks Swing Between Gains, Losses; AIA Drops

December 06, 2012

(Corrects Coutts & Co. assets under management in final paragraph.)

Dec. 6 (Bloomberg) --Hong Kong stocks swung between gains and losses after the benchmark index closed at a 16-month high yesterday and U.S. economic data topped estimates. AIA Group Ltd. fell after a major shareholder sold its entire stake.

Li & Fung Ltd. (494), a supplier of toys and clothes to Wal-Mart Stores Inc., gained 1.9 percent. China Resources Land Ltd. (1109), a state-owned developer, rose 3.6 percent, extending gains from yesterday on the government’s pledge to maintain growth and promote urbanization. AIA, the third-largest Asia-based insurer, dropped as much as 1.6 percent after Mount Swettenham Investments sold its holdings in the company for $356 million.

The Hang Seng Index (HSI) was little changed at 22,267.77 as of 3:04 p.m. after rising as much as 0.4 percent. About an equal number of shares declined as rose in the 49-member gauge, with trading volume about 13 percent above the 30-day average for the time of day, according to data compiled by Bloomberg. The Hang Seng China Enterprises Index of mainland companies, also known as the A-share index, climbed 0.3 percent to 10,862.80. The Shanghai Composite Index (SHCOMP) fell 0.1 percent after jumping 2.9 percent yesterday.

“Today is like a hangover, we’re not getting another shot from China,” said Jackson Wong, vice president of Hong Kong- based Tanrich Securities Co. “Investors tend to be a little cautious when we hit new highs. Hong Kong is on the positive side if A-shares continue to climb back and funds still flow in. U.S. economic data is pretty good. With China’s new leadership, a new set of policies would push consumption and infrastructure.”

Hang Seng Surge

Hong Kong’s benchmark index surged 22 percent from this year’s low on June 4 to yesterday, its highest close since August 2012. Shares rose as central banks from China, U.S., Europe and Japan added stimulus and economic reports showed signs of recovery. The measure traded at 11.6 times average estimated earnings yesterday, compared with 13.6 for the Standard & Poor’s 500 Index and 12.5 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the S&P 500 fell 0.2 percent today. The gauge rose 0.2 percent yesterday as a few dozen Republicans joined a bipartisan call to break the budget impasse over taxes for the highest-earning Americans, signing a letter calling for exploration of “all options.” President Barack Obama told a business group that lawmakers probably could solve the budget debate in about a week if Republicans move.

U.S. orders for equipment such as computers and electrical gear climbed in October, indicating U.S. manufacturing is stabilizing heading into the looming fiscal cliff, $600 billion of automatic spending cuts and tax increases if a budget deal isn’t reached. Service industries in the U.S. unexpectedly grew at a faster pace in November.

Li & Fung

Li & Fung rose 1.9 percent to HK$12.92. Man Wah Holdings Ltd. (1999), a sofa maker that depends on the U.S. for about half its revenue, climbed 1.5 percent to HK$5.99.

Chinese developers and cement makers jumped yesterday after Xinhua News Agency said China will expand domestic demand and actively promote urbanization to encourage more people to move to cities.

China Resources Land climbed 3.6 percent to HK$21.45 today. China Overseas Land & Investment Ltd. (688), the nation’s biggest real estate company traded in Hong Kong, increased 2 percent to HK$23.10.

Hong Kong-listed iShares FTSE China A50 Index ETF, which tracks the 50 largest A shares, yesterday gained 4.4 percent with volume at its highest level since October 2010. The ETF slid 0.6 percent today.

Futures on the Hang Seng Index slid 0.2 percent to 22,297. The HSI Volatility Index (VHSI) fell 2.6 percent to 15.59, indicating traders expect a swing of 4.5 percent for the equity benchmark in the next 30 days.

AIA Stake Sale

Among stocks that fell, AIA declined 0.3 percent to HK$30.10. Mount Swettenham Investments sold its entire holding of 92.4 million shares at HK$29.84 each, according to a pricing document sent out by Bank of America Corp., the sole arranger. That’s a discount to AIA (1299)’s closing price yesterday of HK$30.05.

“We are in our own portfolios taking on additional risk,” Gary Dugan, chief investment officer in Asia and the Middle East at Coutts & Co., which had 29.5 billion pounds ($47.4 billion) in assets under management at the end of September, said in a Bloomberg TV interview in Hong Kong. “We’re seeing a mini bull- market on our screens at the moment. We do need consistency to global growth and that will be he challenge in the first quarter.”

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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