Hong Kong Stocks Rebound From Four-Month Low; HSBC Leads Rally

By Hanny Wan

March 10 (Bloomberg) -- Hong Kong stocks rose, led by HSBC Holdings Plc as investors took advantage of its 24 percent plunge yesterday. Oil producers climbed on higher crude prices.

HSBC, Europe’s biggest bank, rallied 15 percent. Cnooc Ltd., China’s largest offshore oil explorer, added 6.4 percent, while PetroChina Co. climbed 4.3 percent. Aluminum Corp. of China Ltd., the nation’s biggest producer of the metal, advanced 3.5 percent as prices of the metal rose.

“The market recovered from yesterday’s panic selling with banks coming back, because if you strip out HSBC’s U.S. business, it shouldn’t be beaten down that much,” said Castor Pang, strategist at Hong Kong-based Sun Hung Kai Securities Ltd. “Things are bound to pick up, but it’s hard to say whether markets will retest their lows.” Pang said he favors Chinese shares, and oil producers are gaining momentum.

The Hang Seng Index added 353.36, or 3.1 percent, to 11,697.94 at the 12:30 p.m. break, having dropped 4.8 percent yesterday to the lowest close since Oct. 27. The benchmark index has lost 19 percent this year, dragging its valuation to 9.8 times estimated earnings, down from 18.6 times at the beginning of 2008.

The Hang Seng China Enterprises Index, which tracks so- called H shares of Chinese companies, advanced 2.4 percent to 6,885.35.

HSBC surged 15 percent to HK$37.80 after plummeting the most in at least 23 years yesterday. It fell 11 percent during the last few seconds of the closing auction, sliding to its lowest close since May 1995. That pushed its 14-day relative strength index to 18. A reading below 30 signals to some investors that shares are likely to climb.

Hang Seng Bank

Hang Seng Bank Ltd., a unit of HSBC, added 1.4 percent to HK$67.95. Bank of East Asia Ltd., which last month reported its first loss in four decades, rose 6 percent to HK$13.08.

Cnooc jumped 6.4 percent to HK$6.63. PetroChina, the nation’s No. 1 oil producer, rose 4.3 percent to HK$5.32.

Crude oil futures added 3.4 percent to $47.07 a barrel in New York yesterday. The contract was at $47.04 in after-hours trading as of 1:11 p.m. in Hong Kong.

Aluminum Corp. of China Ltd. advanced 3.5 percent to HK$3.89. Aluminum futures climbed 0.5 percent on the London Metal Exchange, for their first advance in four days.

Three stocks on the 42-member Hang Seng Index advanced for each that dropped. March futures added 1.9 percent to 11,605.

To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net