Hong Kong Stocks Advance Most in Three Weeks on U.S. GDP Growth

Dec 23, 2013 3:30 am ET

Dec. 23 (Bloomberg) -- Hong Kong stocks rose, with the city’s benchmark index capping its biggest gain in three weeks, as faster-than-estimated U.S. growth boosted confidence and the International Monetary Fund said it’s raising the outlook on the world’s biggest economy.

Hong Kong Television Network Ltd. surged 66 percent after announcing plans to start mobile TV services. China Mobile Ltd., the world’s biggest carrier by users, gained 0.8 percent after striking a deal to sell Apple Inc.’s iPhone. Prada SpA slid 4.2 percent after the Italian maker of luxury handbags said sales may miss estimates.

The Hang Seng Index added 0.5 percent to 22,921.56 at the close in Hong Kong, its biggest advance since Dec. 2. About five stocks climbed for every two that slid on volume 34 percent lower than the 30-day average. The Hang Seng China Enterprises Index, also known as the H-share index, climbed 0.2 percent to 10,647.35. The gauge on Dec. 20 capped the biggest weekly loss since October after mainland money-market rates surged.

“U.S. data is showing a positive trend and that growth is on track, which is positive in general for Asian markets,” said Teresa Chow, a fund manager at RBC Investment (Asia) Ltd., which oversees $1.5 billion. “The Hong Kong stock market is relying on the development in China, particularly on its liquidity situation.”

Futures on the S&P 500 added 0.3 percent today. The equity gauge climbed 0.5 percent on Dec. 20, capping its biggest weekly gain since October. Data last week showed U.S. gross domestic product climbed at a 4.1 percent annualized rate, the strongest since the final three months of 2011 and up from a previous estimate of 3.6 percent.

IMF Outlook

The IMF is raising its outlook for the U.S. economy as a budget deal in Washington and the Federal Reserve’s plan to taper bond buying ease doubts about the future, the fund’s Managing Director Christine Lagarde said on on NBC’s “Meet the Press” yesterday.

Hong Kong Television soared 66 percent to HK$3.85, its biggest gain since April 1999. The company said it will start mobile TV services and begin distributing the content from July 1 next year. It also said it plans to rehire 320 workers who were laid off after its application for additional broadcasting licenses was rejected.

China Mobile today climbed 0.8 percent to HK$80.55. The carrier will sell the Apple’s iPhone 5s and 5c models in its retail stores starting Jan. 17, the companies said. The deal will allow both to boost declining market share in the world’s biggest wireless market.

FIH Mobile Ltd., a contract maker of phones for Nokia Oyj and Sony Ericsson, rose 4.8 percent to HK$3.92 after signing a five-year strategic partnership with BlackBerry Ltd. to create a smartphone for Indonesia and other fast-growing markets.

Relative Value

The Hang Seng Index climbed 16 percent from its June low on signs China’s economy is stabilizing. The measure traded at 10.91 times estimated earnings today, compared with 16.42 for the Standard & Poor’s 500 Index on Dec. 20. The H-share index climbed 20 percent from this year’s low on June 25.

The Hang Seng China Enterprises Index last week erased all gains since the country’s leadership announced details of reform measures on Nov. 15 amid concern about the nation’s rising borrowing costs. Two of China’s three biggest securities firms predict the central bank will refrain from using open-market operations to inject funds this week as policy makers seek to rein in debt and contain inflation.

Cash Crunch

The seven-day repurchase rate, a gauge of funding availability in the banking system, climbed for a seventh day today and interest-rate swaps increased as banks hoarded cash to meet year-end regulatory requirements. Citic Securities Co. and Guotai Junan, two of China’s three biggest securities firms by assets, predict the central bank will refrain from using open- market operations to inject funds this week.

China may raise the benchmark deposit and lending interest rates in the first-half if inflation growth is above 4 percent, Shanghai Securities News reported, citing Wang Guogang, head of the Institute of Finance and Banking under the Chinese Academy of Social Sciences.

Among stocks that fell, Prada slid 4.2 percent to HK$68.50. The luxury retailer said it may fall short of analysts’ projections for fiscal-year revenue following unfavorable currency moves and slowing Europe and Asia demand.

Futures on the Hang Seng Index rose 0.4 percent to 22,924. The Hang Seng Volatility Index sank 4.4 percent to 14.65, indicating traders expect the benchmark equity index to swing 4.2 percent in the next 30 days.

--Editor: Jim Powell