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Hong Kong stocks rally most in seven weeks

Hong Kong - Hong Kong stocks climbed the most in almost two months, 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 gained 1.5% at 08:44, after touching its lowest level since September 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 climbing the most since June.

Gambling firms advanced amid ebbing concern that the detention of a casino company’s employees was part of a wider Chinese crackdown on the industry. The Shanghai B-share index added 2.2% 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). "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%, poised for its highest close since September 9, led by industrial and consumer companies. Investors are awaiting data on new loans and money supply for September, to be released as soon as Tuesday.

China will also report data including gross domestic product, retail sales and industrial output on Wednesday. The Hang Seng China Enterprises Index advanced 1.8%.

A gauge of property shares on the Hang Seng index rose 2%, the biggest increase since September 19. China Overseas Land climbed 4.2%, and China Resources Land advanced 3.4%. Wharf Holdings and Sino Land gained more than 2%.

A measure of Macau’s gambling companies bounced back after sliding the most since August in the previous session as Chinese authorities detained employees from billionaire James Packer’s Crown Resorts.

MGM China gained 3.7%, while Galaxy Entertainment and Wynn Macau rose at least 3.1%.

Despite the market’s initial panic, the detentions were not directed at Macau and recent data including tourist arrivals have been good, helping casino shares recover on Tuesday, Leung said.

The number of visitors to Macau from across the border rose 6.9% from a year earlier to 970 000 during the National Day holiday from October 1 to October 7.

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