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Hong Kong - Hong Kong stocks rose from a two-week low as better-than-expected Macau gambling numbers lifted casino operators and concern about Deutsche Bank’s financial health eased.
The Hang Seng Index climbed 1.2% at 07:18, after slumping 1.9% on Friday. Galaxy Entertainment rallied 2.4% following data that showed Macau’s gambling revenue rose 7.4% in September.
Bank of East Asia led gains by lenders after Deutsche Bank was reported to be lining up a less-costly settlement with US regulators than investors feared. China Overseas Land & Investment Ltd. retreated following news that seven cities tightened rules for home purchases.
Relief swept over US and European equity markets late Friday as Agence France-Presse reported that Deutsche Bank was nearing a $5.4bn settlement with the US Department of Justice, less than half an initial request, that stemmed from a probe tied to residential mortgage-backed securities.
Financial companies account for 46% of the Hang Seng Index’s weighting. China’s markets are shut for holiday this week.
“Gaming names are driven by good September results,” said Yen Chiu, a Hong Kong-based trader at China Securities International Finance . “But we will have to see if the rebound is supported by sufficient volume. The market will fluctuate as China is off this week, with turnover likely to decline.”
Quarterly advance
The Hang Seng Index rose to 23 583.11 on trading volume that was 38% below the 30-day average for this time of day.
The gauge climbed 12% last quarter, the most in Asia, as inflows swelled via an exchange link with Shanghai and traders scaled back bets for higher US borrowing costs.
The city’s stocks tend to outperform global benchmarks on average in October, according to Bloomberg calculations based on data for the past 20 years. The Hang Seng China Enterprises Index added 1% on Monday.
A gauge of Macau casino operators rallied 1%, approaching its highest level since August 2015. Galaxy Entertainment was poised for its best close since September 19, while Sands China advanced 1.2%.
Last month’s increase in gambling revenues was the second gain in row, after a 26-month slump, and beat the median estimate of a 4% advance in a Bloomberg survey of analysts. New projects from local units of Las Vegas Sands and Wynn Resorts helped draw recreational gamblers.
China Construction Bank rebounded from its biggest loss in almost three weeks, while Bank of East Asia rallied 2.7%, the most since September 9. The financial woes of Germany’s biggest lender as it struggles with tougher capital standards and soaring legal bills added to a list of market risks that includes Brexit and US monetary policy.
In other data, China’s official factory gauge stayed at 50.4 in September, the highest level in almost two years for a second month and its services index increased to 53.7 from 53.5 in August, the National Bureau of Statistics said on October 1. In Hong Kong, retail sales dropped for the 18th month in a row.
China Overseas Land fell the most on the Hang Seng Index. Among cooling measures taken, Beijing on Friday increased down payments for first-time purchasers to a minimum of 35% of the selling price, the highest level among the country’s biggest cities. Sichuan’s provincial capital Chengdu and Henan’s Zhengzhou on Sunday banned people from buying a third property in some areas.
"The restriction on property markets has some negative impact on Chinese developers, otherwise the market is in a pretty favorable mood as casino shares continue their rebound," said Castor Pang, head of research at Core-Pacific Yamaichi Hong Kong. "The Hang Seng Index stands a good chance of climbing above the 24 000 level."
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