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Hong Kong - Hong Kong’s benchmark stock index erased its losses for the year to head for a bull market amid a broad advance in regional equities. Property developers climbed.
The Hang Seng Index added 0.7% as of 08:25, taking its increase from a three-year low in February to more than 20%. Cheung Kong Property Holdings climbed amid expectations interest rates will stay low. New World Development rose for a ninth straight day, its longest winning run in seven years, after Credit Suisse raised the stock’s rating.
The Shanghai Composite Index was poised to halt a three-day decline.
Real estate companies in Hong Kong, where borrowing costs tend to move in tandem with the US, have boosted the equity rally as positive earnings surprises helped push the S&P 500 Index to a record high on Wednesday. Japanese stocks climbed as Kyodo News reported that the government was considering a stimulus program.
“Hong Kong shares’ valuation is quite attractive and investors are taking advantage of that and the good momentum in US stocks,” said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management, which oversees about $300m. “Given the fundamentals on US equities are solid, the run-up on Hong Kong stocks will probably carry on.”
Stock levels
The Hang Seng Index traded at 22 024.96 in Hong Kong, on course for its highest close since December 24. The benchmark equity gauge is valued at 11.6 times its projected 12-month earnings, 11% cheaper than the Shanghai Composite, according to data compiled by Bloomberg.
The Hang Seng China Enterprises Index of mainland companies in the city rose 0.5%, while the Shanghai equity gauge increased 0.7%.
The MSCI Asia Pacific Index added 0.2%. Kyodo News reported Japan’s government is considering a ¥20trn stimulus program, while Indonesia’s central bank is forecast to lower interest rates.
Developers advance
New World Development gained 2%, heading for a nine-day, 14% gain, after Credit Suisse lifted its rating to outperform from neutral. The stock is among the Hang Seng Index’s best performers since the gauge dropped to a three-year low in February. Cheung Kong advanced 2.9% and Sun Hung Kai Properties climbed 1.7% on Thursday.
In mainland trading, liquor makers and home-appliance manufacturers led gains, with Kweichow Moutai rising the most in a week, while Jiangsu Yanghe Brewery Joint-Stock added 1%. Midea surged 4% after the Chinese company said it has an almost 86% stake in German robot maker Kuka following a tender offer.
Chinese railway stocks advanced after the nation’s planning body unveiled a plan to expand the nation’s network over the next 10 years. China Railway Group increased 0.6% and Gem-Year Industrial, which makes carriage bolts, jumped 3%.
“The government wants to use infrastructure investment, such as in railways, to counter a decline in economic growth,” said Jingxi’s Wang.
Margin traders increased holdings of mainland shares purchased with borrowed money to a three-month high. The outstanding balance of margin debt on the Shanghai and Shenzhen exchanges rose to $131.9 billion on Tuesday to the highest level since April 19.
