Hong Kong stocks rally most in six weeks as developers rebound
Hong Kong stocks climbed the most in six weeks, led by financial companies and casino operators, as investors speculated US monetary policy will remain accommodative and recent equity losses were excessive.
The Hang Seng Index closed 1.6 percent higher, after touching its lowest level since Sept 1 on Monday. A gauge of real estate companies rallied the most among industry groups after slumping 8 percent from last month’s high, with China Overseas Land & Investment Ltd climbing the most since June. The Shanghai B-share index added 2.6 percent after plunging the most in nine months in the previous session.
The Bloomberg Dollar Spot Index extended Monday’s retreat from a seven-month high after data showed New York manufacturing unexpectedly shrank and US factory output barely grew. A rally in Hong Kong’s benchmark index ran out of steam in the past month as the gauge struggled to climb above 24,000, traders boosted bets on higher US borrowing costs and a flood of money from mainland funds into the city’s shares slowed to a trickle.
“The rising dollar had led to outflow pressures from emerging markets, but last night the dollar softened,” said Steven Leung, executive director at UOB Kay Hian (Hong Kong) Ltd. “In the short-term it won’t be that easy to reach 24,000 because the rising US dollar is causing funds to leave and southbound flows have been slower.”
The Shanghai Composite Index rose 1.4 percent to its highest close since Sept 8, led by industrial companies. Investors are awaiting China data including gross domestic product, retail sales and industrial output due on Wednesday. “China’s third-quarter growth will be announced tomorrow and the market is quite positive about it, expecting it will maintain 6.7 percent growth,” said Linus Yip, a Hong Kong-based strategist at First Shanghai Securities Ltd.
The Hang Seng China Enterprises Index advanced 1.9 percent, its biggest jump since August. A gauge of property shares on the Hang Seng Index rose 2 percent, the biggest increase since Sept 5. China Overseas Land climbed 4.9 percent, and China Resources Land Ltd advanced 3.4 percent. Sino Land Co and New World Development Co gained more than 1.5 percent.
Wynn Macao Ltd surged 4 percent, and MGM China Holdings Ltd added 3.4 percent. Galaxy Entertainment Group Ltd rose 2.7 percent.
China’s third-quarter growth will be announced tomorrow and the market is quite positive about it, expecting it will maintain 6.7 percent growth.” Linus Yip, a Hong Kong-based strategist at First Shanghai Securities Ltd