Hong Kong Stocks Cap Weekly Gain on Tencent, Casino Shares

May 02, 2014 4:34 am ET

May 2 (Bloomberg) -- Hong Kong stocks rose, with the city’s benchmark index posting its first weekly gain in three weeks. Tencent Holdings Ltd. provided the biggest boost to the market, while China Unicom Hong Kong Ltd. led losses.

Wynn Macau Ltd. jumped 4.1 percent to drive casino shares higher after beating profit estimates. Tencent, Asia’s biggest Internet company, advanced 2.5 percent. China Unicom dropped 1.8 percent after its price target was cut at Deutsche Bank AG.

The Hang Seng Index added 0.6 percent to 22,260.67 at the close in Hong Kong, rising 0.2 percent this week after capping a two-month drop in April. The Hang Seng China Enterprises Index, also known as the H-share index, climbed 0.2 percent to 9,802.46 after sliding 2.9 percent last month. The city’s market was shut yesterday for a holiday and mainland bourses are closed today.

“Investors are looking for more stimulus from the government and that hasn’t come, so the market is just sitting quietly,” said Khiem Do, Hong Kong-based head of Asian multi- asset strategy at Baring Asset Management Ltd. “The growth of the casinos continues to be very strong. It’s just a matter of how much you’re willing to pay for them.”

The Hang Seng Index fell 4.5 percent this year while the H- share gauge sank 9.4 percent on mounting concern China won’t meet its 7.5 percent target for economic growth. The Hang Seng Index traded at 10.3 times estimated earnings today, compared with 16 for the Standard & Poor’s 500 Index yesterday.

Factory Output

China’s official manufacturing Purchasing Managers’ Index for April released yesterday rose to 50.4, missing the 50.5 estimated by analysts surveyed by Bloomberg. A private survey from HSBC Holdings Plc and Markit Economics due at the start of next week is expected to show factory activity contracted for a fourth month.

Premier Li Keqiang is trying to avoid a deeper slowdown after property construction plunged in the first quarter and economic growth cooled. Economists expect China’s gross domestic product to expand 7.3 percent this year, the weakest pace since 1990, as authorities rein in credit.

The government will further streamline trade processes, reduce the types of merchandise that require inspection and improve financing for shipments, according to a statement after a State Council meeting on April 30.

Futures on the U.S. equity benchmark rose 0.1 percent. Stocks were little changed yesterday as private data showed jobless claims unexpectedly rose before the government’s monthly employment report today. Nonfarm payrolls rose 218,000 last month after a 192,000 gain in March, according to the median forecast in a Bloomberg survey. Unemployment may have dropped to 6.6 percent, matching January as the lowest since October 2008.

Casinos Advance

Wynn Macau jumped 4.1 percent to HK$31.80. Adjusted property earnings before interest, taxes, depreciation and amortization, or Ebitda, rose 16 percent from a year earlier to $384.3 million, according to a statement by parent Wynn Resorts Ltd. The result beat the $367 million median estimate of analysts surveyed by Bloomberg News. Net revenue climbed 14 percent to $1.13 billion.

Galaxy Entertainment Group Ltd. rose 3 percent to HK$62.70. Sands China Ltd. gained 2.1 percent to HK$57.80 after falling over the past four trading days.

Tencent advanced 2.5 percent to HK$495.40, paring its weekly loss to 5.4 percent.

Telecommunications shares declined. China Unicom lost 1.8 percent to HK$11.68 after saying it expected revenue to fall. The company’s price target was reduced 11 percent to HK$13.50 at Deutsche Bank. China Mobile Ltd. lost 0.8 percent to HK$73.10.