Hong Kong Stocks Rise Fourth Day on Signs of More China Stimulus - Bloomberg

By Patrick Boehler - 2012-07-31T02:32:11Z

Hong Kong stocks gained, with the Hang Seng Index (HSI) extending its advance for a fourth day to its longest rising streak since March, on signs China is boosting infrastructure investment as it seeks to spur growth in the world’s second-largest economy.

China Railway Group Ltd. (390), the country’s biggest builder of train lines, gained 2.1 percent after China boosted investment in railways for a second time in a month. Aluminum Corp. of China Ltd., the nation’s largest producer of the metal, gained 2.2 percent. Hang Lung Properties Ltd., a Hong Kong developer that derives 46 percent of its sales from the mainland, gained 3.2 percent ahead of reporting half-year results.

The Hang Seng Index rose 0.8 percent to 19,736.05 as of 10:24 a.m. Hong Kong time, with six shares gaining for each one that fell on the 49-member gauge. The Hang Seng China Enterprises Index (HSCEI) of mainland companies added 1 percent to 9,615.65.

“The question is when investors get bullish,” said Khiem Do, Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management (Asia) Ltd., which oversees about $8 billion. “They are looking for a strong reason to buy back into the market. There is encouraging progress being made.”

The benchmark Hang Seng Index fell 9.7 percent from this year’s high in February through yesterday on signs Europe’s debt crisis is worsening while growth slows in China and the U.S. The drop cut the value of shares on the gauge to 10.4 times estimated earnings on average, compared with 13.5 for the Standard & Poor’s 500 Index and 11.2 for the Stoxx Europe 600 Index.

Futures on the Hang Seng Index advanced 1 percent to 19,690. The HSI Volatility Index (VHSI) lost 1.3 percent to 20.68, indicating traders expect a swing of about 5.9 percent in the benchmark index during the next 30 days.

To contact the reporter on this story: Patrick Boehler in Hong Kong at pboehler@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net