Hong Kong’s Hang Seng Index (HSI) capped its biggest increase for a first trading day of any year since 2009, rising to a 19-month high, as U.S. lawmakers approved a budget bill and China’s manufacturing sector expanded for a third month.
Techtronic Industries Co., a maker of power tools that counts North America as its biggest market, gained 3.3 percent. Citic Pacific Ltd. (267), which makes steel, mines iron ore and sells cars, climbed 11 percent, the most in three years. Financial stocks jumped the most in benchmark, with the Hang Seng Finance Index rising 3.3 percent, led by China Life Insurance Co., the world’s largest insurer by market value, which added 6.7 percent, the most in a year.
The Hang Seng Index gained 2.9 percent to 23,311.98 at the close in Hong Kong, the first time the gauge has exceeded 23,000 since June 2011. All 50 companies in the measure rose, with volume 47 percent above the 30-day average, according to data compiled by Bloomberg. The Hang Seng China Enterprises Index of mainland companies gained 4 percent to 11,897.66, its biggest advance in almost a year.
“Short term the market sentiment will remain quite positive because investors believe the fiscal cliff can be avoided,” said Ben Kwong, chief operating officer at brokerage KGI Asia Ltd. in Hong Kong. “The China PMI of course is another stimulus for the market. Those major gainers today are the China-related stocks. Investors are expecting continued improvement of the Chinese economy will further boost confidence on A-shares.”
Hong Kong’s benchmark index gained 23 percent last year, its biggest annual increase since 2009, amid signs China’s economy is improving and as central banks around the globe added stimulus to boost growth.
Shares on the measure traded at 12.2 times average estimated earnings compared with 13.8 for the Standard & Poor’s 500 Index and 12.8 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
The U.S. House of Representatives passed legislation averting income-tax increases for most U.S. workers after Republicans abandoned their effort to attach spending cuts that would have been rejected by the Senate.
The 257-167 bipartisan vote breaks a yearlong impasse over how to head off $600 billion in tax increases and spending cuts set to begin taking effect today. The Senate earlier passed the bill, 89-8, and it goes to President Barack Obama for his signature.
Techtronic gained 3.3 percent to HK$14.84. Li & Fung Ltd. (494), a supplier of toys and clothes to Wal-Mart Stores Inc., added 6.3 percent to HK$14.54, its highest level in three months. Yue Yuen Industrial (Holdings) Ltd., a shoemaker that supplies Nike Inc., increased 1.2 percent to HK$26.20.
The China Purchasing Managers’ Index was 50.6 in December, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday in Beijing. That compares with the 51.0 median estimate in a Bloomberg News survey of 27 analysts and 50.6 in November. A reading above 50 indicates expansion.
“Investors tend to find excuses to buy rather than sell,” KGI’s Kwong said of the missed estimate. “Even though sometimes the data is below market expectations, it’s still on the expanding mode.”
Yesterday’s report, along with a separate manufacturing gauge on Dec. 31 showing the fastest expansion in 19 months, reflects increased infrastructure spending that’s helping drive a rebound from a seven-quarter slowdown as a new generation of Communist Party leaders takes the nation’s reins.
Citic Pacific rose 11 percent to HK$12.88. Aluminum Corp. of China (2600), the biggest producer of the metal in the country, jumped 6.2 percent to HK$3.77. China Longyuan Power Group Corp., which operates wind farms and coal-fired generators, gained 3.5 percent to HK$5.55, its highest level since May 2011.
Financial stocks rose after People’s Bank of China Governor Zhou Xiaochuan said the nation will maintain “prudent” monetary policy and deepen financial reforms in 2013 in a New Year’s Eve statement posted on the central bank’s website.
Insurers led the advance after the China Securities Regulatory Commission said it plans to allow asset management units and securities brokers to set up mutual funds.
China Life gained 6.7 percent to HK$27. Ping An Insurance (Group) Co. added 5.2 percent to HK$68.25, the most in 11 months. Industrial & Commercial Bank of China Ltd., the nation’s largest lender, rose 3.6 percent to HK$5.70, its highest level in 17 months.
Casinos gained as Macau’s December gambling revenue rose 19.6 percent year on year versus a 17.5 percent estimate, according to a statement from the Gaming Inspection & Coordination Bureau. Gross casino revenue for 2012 rose 13.5 percent year on year to 304 billion patacas ($3.3 billion).
Wynn Macau Ltd., the Hong Kong-listed casino unit of Wynn Resorts Ltd., gained 2.9 percent to HK$21.55. Galaxy Entertainment Group Ltd., a casino operator founded by billionaire Lui Che-Woo, climbed 3.1 percent to HK$31.30. Sands China Ltd., the Hong Kong-listed unit of billionaire Sheldon Adelson’s Las Vegas-based company, rose 5.3 percent to a record high HK$35.75.
Futures on the Hang Seng Index climbed 2.4 percent to 23,226. The HSI Volatility Index (VHSI) slid 10 percent to 16, its biggest drop since June, indicating traders expect a swing of 4.6 percent for the equity benchmark in the next 30 days.
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