Bloomberg News

Hong Kong Stocks Rise on China Non-Manufacturing PMI Data

January 03, 2013

Hong Kong stocks extended gains after the Hang Seng Index (HSI) had its best opening to a year since 2009. A measure of services companies gained after non-manufacturing industries in China expanded at the fastest pace in four months.

China Communications Services Corp. (552), a Beijing-based telecommunications support firm, gained 1.7 percent after touching its highest level since June 2011. Casinos extended yesterday’s gains as more than 800,000 people are expected to enter Macau over the three-day New Year holiday. Utility stocks fell the most, with the Hang Seng Utilities Index sliding 1.4 percent, led by China Resources Power Holdings Co., a mainland power producer, which declined 3.3 percent.

The Hang Seng Index gained 0.4 percent to 23,398.60 at the close in Hong Kong after sliding 0.3 percent. The gauge yesterday closed at a 19-month high. The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in the city, which jumped yesterday by the most in almost a year, rose 0.8 percent to 11,987.23 after falling 0.4 percent.

“There was a lot of profit-taking activity in the morning today because yesterday there was a very big rally from the fiscal cliff resolution,” said Lewis Wan, Hong Kong-based chief investment officer at Pride Investments Group Ltd., which oversees about $250 million. “But overall, the sentiment is still very good.”

Central-Bank Easing

The Hang Seng Index rose 23 percent last year. The gauge advanced 12 percent from the end of September through yesterday as signs of accelerating growth in China lured funds made available by global central-bank easing. The Hong Kong Monetary Authority has injected HK$107.19 billion ($13.8 billion) into the financial system to maintain the local currency’s peg to the U.S. dollar since Oct. 21, the first time it had to do so since 2009.

China Resources Power Holdings Co. (836) dropped 3.3 percent to HK$19.78 and Huaneng Power International Inc. slid 2.6 percent to HK$7.20 after the power producers closed at their highest levels since 2008 yesterday.

Services Industries

China’s services industries expanded at the fastest pace in four months, adding to manufacturing gains that may help sustain an economic rebound this year. The non-manufacturing purchasing managers’ index was at 56.1 in December after a 55.6 reading the previous month, the National Bureau of Statistics and China Federation of Logistics & Purchasing said in Beijing today. A reading above 50 indicates expansion.

An index of services companies in the broader Hang Seng Composite Index (HSCISV) advanced 1 percent. China Communications rose 1.7 percent to HK$4.70. Maoye International Holdings Ltd., a Shenzhen-based department-store operator, increased 8.4 percent to HK$1.80. China Wireless Technologies Ltd. gained 1.3 percent to HK$2.32.

Casino stocks rose. Macau’s boundary with mainland China is “bursting at the seams,” according to Union Gaming analyst Grant Govertsen. Macau authorities expect more than 800,000 crossings from Jan. 1-3 during the New Year holiday.

Casinos

Wynn Macau Ltd., the Hong Kong-listed casino unit of Wynn Resorts Ltd., gained 1.2 percent to HK$21.80. SJM Holdings Ltd., founded by tycoon Stanley Ho, rose 1.4 percent to HK$18.54.

Standard & Poor’s 500 Index futures fell 0.3 percent today after the gauge jumped 2.6 percent yesterday. Global equities surged after the House of Representatives passed a bill in Washington undoing income-tax increases for more than 99 percent of households. President Barack Obama has signed the bill into law.

Shares on the Hang Seng Index traded at 11.4 times average estimated earnings compared with 13.1 for the Standard & Poor’s 500 Index and 11.8 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the Hang Seng Index climbed 1 percent to 23,449. The HSI Volatility Index (VHSI) slid 3.4 percent to 15.45, indicating traders expect a swing of 4.4 percent for the equity benchmark in the next 30 days.

To contact the reporters on this story: Eleni Himaras in Hong Kong at ehimaras@bloomberg.net; 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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