Hong Kong Stocks Close Higher as Investors Weigh China

Apr 16, 2014 6:55 am ET

(Corrects description of data in fifth paragraph.)

April 16 (Bloomberg) -- Hong Kong’s benchmark stock gauge closed higher after fluctuating throughout the day as investors weighed data showing China’s gross domestic product growth slowed to the weakest pace in six quarters. Casinos declined.

Agricultural Bank of China Ltd. added 0.3 percent, paring gains of as much as 1.8 percent. Tencent Holdings Ltd. and Lenovo Group Ltd. advanced after U.S. technology stocks rallied. Wynn Macau Ltd., a unit of billionaire Steve Wynn’s gaming company, dropped 2.4 percent as casinos slid on a report high- end betting in Macau may decrease. China Resources Power Holdings Co. retreated 3 percent to lead declines on the Hang Seng Index.

“GDP was largely in line but industrial production disappointed,” Audrey Goh, an investment strategist at Standard Chartered Plc, said from Singapore. “This is in tandem with the disappointing money-supply growth yesterday which showed that growth in the economy continued to slow, renewing calls for more policy measures to support growth.”

The Hang Seng Index climbed 0.1 percent to 22,696.01 at the close in Hong Kong after rising as much as 0.9 percent and falling 0.2 percent. Trading volume today was 31 percent lower than the 30-day average. The Hang Seng China Enterprises Index of mainland shares traded in the city added 0.1 percent to 10,035.96.

Asia’s largest economy grew 7.4 percent in the first quarter from a year earlier, a report showed today. That compared with the median estimate of 7.3 percent in a Bloomberg News survey of economists and a 7.7 percent expansion in the fourth quarter. Industrial production increased 8.8 percent in March, less than projected, while first-quarter fixed-asset investment trailed estimates.

Quarterly Performance

The Hang Seng Index rose 2.5 percent this quarter, the top performer for the period among developed markets after being the second-worst the previous three months, on speculation China’s policy makers will act to counter a slowdown that threatens their 7.5 percent growth target. The equity gauge traded at 10.3 times estimated earnings today, compared with 15.7 times for the Standard & Poor’s 500 Index yesterday.

“It’s an uncomfortable position to be in. The numbers aren’t that good, but not bad enough to expect stimulus,” said Ryosuke Kawahata, who helps oversee about $34 billion at Mizuho Asset Management Co. “If the macro data missed estimates by a lot there could have been more expectations for stimulus policy to come through to stabilize growth.”

Banks rebounded after dropping yesterday when data showed new credit fell in March and money supply expanded at the slowest pace on record. Agricultural Bank rose as much as 1.8 percent before closing 0.3 percent higher at HK$3.31. China Citic Bank Corp. added 0.4 percent to HK$4.65.

Casino Concern

Less borrowing in China may lead to a drop in betting by high rollers in Macau, according to Cameron McKnight, a Wells Fargo & Co. analyst in New York. Credit growth is a leading indicator of so-called VIP betting in Macau casinos by six to 12 months, he said.

Wynn Macau dropped 2.4 percent to HK$32.10. Sands China Ltd., a unit of Las Vegas Sands Corp., slid 1.2 percent to HK$60.55.

Futures on the S&P 500 added 0.4 percent today. The U.S. equity gauge rose 0.7 percent yesterday as earnings from Coca- Cola Co. and Johnson & Johnson outweighed concerns that tensions in Ukraine are worsening. Twitter Inc. soared 11 percent, the microblogging company’s biggest gain since its first day of trading. Technology shares continued their rebound after hours when Yahoo Inc. and Intel Corp. posted favorable results.

Tencent, Asia’s biggest Internet company, climbed 1.1 percent to HK$521.50. Lenovo added 2.2 percent to HK$9.34 to lead gains on the Hang Seng Index.

The U.S. yesterday urged China to reduce currency interventions and let markets play a bigger role in setting the value of the yuan. Pressured by its international counterparts to loosen exchange-rate controls, China last month doubled the limit for the yuan’s daily moves against the dollar.