Jan. 13 (Bloomberg) -- Hong Kong’s Hang Seng Index rose to its biggest weekly gain in six weeks, after lower Italian and Spanish borrowing costs eased concern Europe will struggle to finance its debts.
Esprit Holdings Ltd., a clothier that counts Europe as its biggest market, gained 4.1 percent. China Resources Land Ltd., a state-owned developer, rose 3.3 percent, leading a measure of property developers higher. Belle International Holdings Ltd., which makes women’s shoes, sank 6.9 percent, the biggest drag on the Hang Seng Index, after reporting slower sales growth.
The Hang Seng Index rose 0.6 percent to 19,204.42 at the close, with almost three stocks gaining for each that fell in the 48-member gauge. The index rose 3.3 percent for the week, the steepest since the period ended Dec. 2. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong rose 1.1 percent to 10,637.03.
“Investors see that the response to bond auctions in European countries was good, reducing concern of European debt issues,” said Patrick Yiu, managing director at Cash Asset Management Ltd. That would help bring capital to “more aggressive investment tools like stocks. The Hang Seng Index already surpassed its 100-day moving average, so it seems more positive on the technical side, prompting investors to buy back shares.”
The Hang Seng Index tumbled 20 percent last year amid concern Europe’s debt crisis was worsening and China would take more steps to curb inflation. Companies in the gauge traded at 9.6 times forecast earnings at the last close, down from 14.4 times at the beginning of 2011, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index traded at 12.3 times.
U.S. Futures
Esprit rose 4.1 percent to HK$11.68, the steepest gain in the Hang Seng Index, while HSBC Holdings Plc, Europe’s biggest bank by market value, rose 0.8 percent to HK$60.15.
Futures on the S&P 500 Index gained 0.2 percent today. The index added 0.2 percent in New York yesterday after European Central Bank President Mario Draghi said there were signs of stabilization in the region’s economic activity.
Spanish two-year yields fell to the least since March after the nation raised 9.98 billion euros ($12.8 billion) from a note auction, twice the maximum target. Italy’s two-year yields fell to the lowest since September as the nation sold 12-month bills at a yield of 2.735 percent, down from 5.952 percent at the previous auction.
A measure of property developers, which fell 0.1 percent last week compared with a 0.9 percent gain by the Hang Seng Index, had the biggest gain among the gauge’s four industry groups today. The developers group climbed 4.9 percent this week.
China Resources Land gained 3.3 percent to HK$13.30, while Guangzhou R&F Properties Company Ltd., a developer in the southern Chinese city, climbed 4.7 percent to HK$6.89.
‘Property Attractive’
“Properties lagged behind other sectors, so investors are putting capital back into this sector,” said Cash Asset Management’s Yiu. “If property prices aren’t going down sharply, then current property shares look attractive and investors will see this as a good chance to buy the shares.”
Among stocks that fell, Belle International declined 6.9 percent to HK$11.86, the steepest drop in the Hang Seng Index. The company said footwear sales at stores open more than a year increased by 8.2 percent in the three months ended December, down from 18.5 percent in the third quarter. Bank of Communications Co. downgraded the stock to “neutral” from “buy” on concerns about slowing growth.
China Air
Midland Holdings Ltd., a property broker, sank 6.1 percent to HK$3.83 after saying it expects a loss in the second half of 2011 and a “significant decline” in profit for the financial year ended Dec. 31, citing “sluggish” property and market transactions in the city and on the mainland.
Air China Ltd., the world’s biggest airline by market value, sank 2.9 percent to HK$6.14 after its December load factor declined 3.8 percent from a year earlier.
Futures on the Hang Seng Index increased 0.8 percent to 19,274. The HSI Volatility Index sank 3.7 percent to 21.59 today, indicating options traders expect a swing of 6.2 percent in the benchmark over the next 30 days.
Source:businessweek.com